UNCTAD/ECDC/SEU/7
UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT
DEVELOPMENTS IN THE SERVICES SECTOR
IN THE WEST BANK AND THE GAZA STRI P
I
1967-1990
LiNITED NATIONS
Distr.
GENERAL
UNCTAD!ECDC!SEU!7
7 March 1995
ENGLISH ONLY
DEVELOPMENTS IN THE SERVICES SECTOR IN THE
WEST BANK AND THE GAZA STRIP, 1967-1990
Study prepared by an UNCTAD consultant*
* This study is based on the contribution of Dr. Samir Hazboun (Bir-Zeit
University, West Bank) to the intersectoral project of the UNCTAD secretariat
on "Prospects for sustained development of the Palestinian economy in the
West Bank and Gaza Strip". The opinions expressed in this study are those of
the author and do not necessarily reflect those of the Secretariat of the
United Nations.
The designations employed and the presentation of the
material in this document do not imply the expression of any opinion
whatsoever on the part of the Secretariat of the United Nations concerning the
legal status of any country, territory, city or area, or of its authorities,
or concerning the delimitation of its frontiers or boundaries.
GE.95-50684
(El
- 2 -
CONTENTS
List of tables
4
List of abbreviations
6
Preface
7
Chapter I.
The role of the services sector
A.
The Palestinian services sector prior to 1967
1.
2.
B.
C.
D.
E.
F.
G.
H.
West Bank
Gaza Strip
Services in the Palestinian economy after 1967
Intersectoral linkages
Contribution to employment
capital formation in services
Services and the balance of payments
Regulatory and related factors affecting services
Complementarities and regional trade in services
Chapter II. The structure and performance of services branches
A.
Distributive services
1.
Transportation
(a)
(b)
2.
Communications, mass media, and information
services
(a)
(b)
( c)
3.
Domestic transport
International transport
Telecommunications
Mass media
Information services
Domestic wholesale and retail services
(a)
(b)
Trade in agricultural commodities
Trade in manufactured goods
9
11
11
13
14
17
18
21
21
23
24
27
27
27
27
30
31
31
32
33
33
33
34
-
3
CONTENTS (continued)
Chapter II.
(cont'd)
B.
Producer services
1.
Financial services and institutions
(al
(b)
Israeli banks
Palestinian and Arab banks
(i)
(ii)
(iii)
(iv)
(v)
(vi)
37
38
38
39
39
40
41
3.
Real estate, construction and engineering
design services
42
Accounting, legal and other business services
43
Social services.
3.
4.
Doctors, hospitals, dentists, pharmacists
Education: universities and higher education
Welfare, religious and non-profit social
services .
Government and related services
Personal services
1.
Tourism-related services
(a)
(b)
( c)
2.
Chapter III.
37
37
Insurance services
1.
2.
D.
The Bank of Palestine
The Cairo-Amman Bank
Development finance institutions
Cooperative societies
Other credit institutions
Informal credit markets
36
2.
4.
C.
36
Hotels
Restaurants
Other entertainment
Repair and other personal services
Conclusions
45
45
46
46
47
48
48
48
49
50
50
53
Notes .
58
Tables
64
4
List of tables
Table 1.
Browning-Singlemann sectoral classification.
Table 2.
Occupied territory: sectoral distribution of gross domestic
product, selected years, 1968 1987.
Table 3.
Occupied territory:
Table 4.
West Bank:
Table 5.
Gaza Strip:
Table 6.
Occupied territory:
Table 7.
Occupied territory: distribution of gross capital formation by
type and purpose, 1972 1987.
Table 8.
Occupied territory: balance of payments on the
accounts, 1968 1987.
Table 9.
Gaza Strip: balance of payments on the current and capital
accounts, 1968-1987.
Table 10.
West Bank: balance of payments on the current and capital
accounts, 1968-1987.
Table 11.
Number of vehicles by type in the West Bank, selected
years, 1970-1987.
Table 12.
Number of vehicles by type in the Gaza
years, 1970 1987.
Table 13.
Occupied Palestinian territory:
, 1968-1987.
Table 14.
Number of applications and number of approved building licences in
the West Bank, 1985-1990.
Table 15.
Number of engineers in the West Bank, by branch and locality, 1990.
Table 16.
Professions and number of professionals in the West Bank and
, 1990.
Gaza
Table 17.
Number of establishments in major service branches in east
Jerusalem, 1969, 1982 and 1986.
employed persons by sector, 1968 1988.
employed persons by sector, 1968 1988.
employed persons by sector, 1968 1988.
employed persons by occupation.
~urrent
and capital
, selected
travel and services payments and
-
5 -
List of tables (continued)
Table 18.
Palestinian accredited universities: Year of start of
undergraduate degree, number of majors offered, enrolment (1980/81
and 1987/88) and faculty (1987).
Table 19.
Development of hotels in the West Bank, selected years, 1970-1987.
Table 20.
Hotels and rooms in Israel (1989), and the West Bank (1990)
Table 21.
Number of licensed restaurants in the occupied Palestinian
territory, 1987.
- 6
List of abbreviations
ADCC
Arab Development and Credit Company
CBS
Israel Central Bureau of Statistics
CD
Cooperation for Development
CIF
Cost, insurance and freight
EDG
Economic Development Group
ESCWA
United Nations Economic and Social Commission for Western Asia
GDP
Gross domestic product
GNP
Gross national product
ILO
International Labour Office
JD
Jordanian dinar
NGO
Non-governmental organization
NIS
New Israeli shekel
TDC
Technical Development Company
UNCTAD
United Nations Conference on Trade and Development
UNRWA
United Nations Relief and Works Agency for Palestine Refugees in the
Near East
$
United States dollar
- 7
Preface
i.
As part of the work programme of the UNCTAD secretariat pursuant
to resolution 239 (XXIII) of the Trade and Development Board and
resolution 44/174 of the General Assembly, the UNCTAD secretariat initiated,
in 1990/91, the implementation of an in-depth intersectoral project on the
economy of the West Bank and the Gaza Strip. Part One of the project deals
with a comprehensive assessment of the economic and social situation in the
West Bank and the Gaza Strip, the main impediments to sustained growth and
development, pressing needs and corresponding measures for immediate action to
promote recovery. Part Two of the project constitutes an in-depth analysis of
prospects under different scenarios for the future development of the
Palestinian economy.
Part Three of the project is intended to provide a
strategy framework and policy guidelines for the revival and sustained future
development of the Palestinian economy in the West Bank and the Gaza
ii.
For the implementation of the project, the preparation of a total
of 25 in-depth studies was initiated at the field level covering economic and
social sectors and issues. Concurrently, and in order to facilitate deal
with the technical aspects of work on Parts Two and Three, the L~CT~~
secretariat also ewbarked upon the preparation of an in-depth study of a
quantitative framework examining future options and prospects under different
scenarios. The summary findings of part one of the field studies, in
particular an identification of pressing needs and corresponding feasible
measures for immediate action, were presented to an expert group meeting (held
in May 1992) for further consideration. The report of that meeting is
separately published (UNCTAD/DSD/SEU/2). The secretariat's study of a
quantitative framework for analysing future prospects (UNCTAD/ECDC/SEU/6, and
UNCT~~/ECDC/SEU/6/Add.1) also have been published.
111.
In order to provide more detailed substantive background to the findings
and recommendations of the expert group meeting, to support the efforts of the
Palestinian people in examining the socio-economic situation and needs, and tc
enable donors further to develop their programmes of assistance to th.e
Palestinian people, the first parts of a selected number of the field studies,
commissioned within the scope of this project, are being published in a
special study series on palestinian economic and social development. The
second and third parts of the field studies are being separately consolidated
by the UNCTAD secretariat.
iv.
The present document, constituting Part One of the study on services in
the West Bank and the Gaza Strip, is based on a survey report prepared by
consultant, Dr. Samir Hazboun (Bir-Zeit University, West Bank).
Chapter I
describes the role of the services sector in the Palestinian economy before
and after the 1967 war.
It also highl
the linkages between services and
other sectors, and presents the contribution of this sector to employment and
the balance of pa}~ents.
Chapter I also focuses on the factors affecting the
-
8
-
services branches such as the
framework, capital formation and
regional dimensions.
Chapter II reviews in detail the structure and
performance of services branches, and Chapter III presents concluding remarks
and suggestions for possible action regarding areas in need of improvement.
(v)
It should be noted that, in view of the early completion of this
and other in-depth sectoral studies undertaken within the context of the
intersectoral project, the implications of the accords concluded between
Israel and Palestine in 1993 and subsequent developments could not be
reflected in this study.
-
9 -
Chapter I
THE ROLE OF THE SERVICES SECTOR
Introduction
The role of the services sector in economic development has been the
subject of numerous studies, and the focus of many debates.
One incisive
observation is that the structure of an economy is a function of the level of
its
. ~/
the argument is that higher income levels
produce structural changes in the economy.
Indeed, the "level of
development" and the structure of an economy are functionally correlated,
rendering the structure itself to be a criterion of development. Accordingly,
higher income levels and structural change are themselves correlative, or if
mutual
causal, structural change also produces higher' income. Historically,
the prominent structural change in most developing economies has been the
shift from agriculture to industry with modest growth in services, very much
on infrastructural and industrial investment. Of growing
in many economies has been the growth of the services sector
relative to other sectors, particularly the growth of the services sector's
contribution to national product and to employment.
Before examining services in the Palestinian economy, the important
definitional issues raised regarding the "services sector" should be
mentioned.
Fundamentally, the services sector is construed to comprise all
, agencies, organizations, and employers whose final output is not
a material good but rather an intangible product (in both formal and informal
economies). As has been noted recently, "the characterization of services as
'immaterial goods', however, is open to criticism. After all, some services
have elements of
lity ... , visibility ... , (or)
... and may
not require face-to-face contact between producers and consumers ... ". ~/
This may be noted in services such as computer software, theatre plays, or
automatic telephone answering machines.
The activities that may be included under the services sector are
diverse.
For
, nursing, teaching, warehousing, selling insurance
icies, computer programming, as well as sweeping streets, are all included.
This diversity in
poses
for measurement and analysis.
Services are often defined as a residual of all activities not included under
the primary and secondary sectors, i.e. in terms of what they are not:
services are neither agriculture, nor
, nor manufacturing and so on.
Some authors have attempted to focus on the process of production of
services, 2/ in which case, services such as transport, communications, and
public utilities are excluded from the services sector. Other definitions
have been based on common features exhibited by services, which are a
descriptive rather than definitive category, relevant to particular
in
time, and not historically enduring
One alternative classification which appears most relevant to the case
under study is that of Browning and Singlemann,
who distinguish between
four categories of services two of which are "goods-oriented", and two
"consumption-oriented". This definition treats services as the tertiary or
third major economic sector, along with the more standard primary and
secondary sectors, which they have renamed as "extractive" and
10
"transformative" sectors, respectively.
Services are classified under four
distributive, producer, social, and personal services (see
table I).
The first two categories provide services primarily to the
industrial sector, however, some branches included here (such as banks,
wholesale trade, and railways) provide their services to agricUlture, industry
and individuals alike. The output of these two categories is oriented towards
the production, servicing and distribution of material goods.
In the third
category, social services are provided collectively for individual needs and
social order. The fourth category, personal services, is a mixture of
individually organized activities, provided mainly by individuals and/or
enterprises. The output of the latter two categories includes services which
are mainly destined towards final consumption.
It is important to note that this classification, while providing a
detailed framework for defining services, tends to overemphasize the services
sector vis-a-vis primary and secondary sectors. It would be equally possible
to identify the different subsectors/branches within the extractive and
transformative sectors. Distributive producer and personal services are often
grouped together within the "tertiary" sector, with social/public services in
a so-called "quaternary" sector. Moreover, the categories presented in
table 1 are not comprehensive. Other definitions classify services according
to their technological contents,
while the development of the computer
industry and the advent of information technology, have led Gershuny and Miles
to introduce into the Browning-Singlemann framework a further classification
for services:
"intermediate consumer services". 2./
It may be inferred from the above discussion that there is a broad range
of services that have developed and are still developing in industrialized
economies. The growth and size of the services sector in those economies
appear to be pronounced for the following major reasons: 10/
(a)
The increasing demand for "intermediate" or "producer" services
from elsewhere in the economYi
(b)
The increasing demand for services, which are income elastic, from
final consumers as people get more affluent; and,
(c)
A lower rate of increase of labour productivity in the services
sector relative to manufacturing.
while these reasons are relevant, the parallel drawn by this
"post industrialization" thesis between the two transitions (agriculture to
industry and industry to services) is not certain. The first transition is
inevitable with the declining share of income spent on food.
However, the
second is not inevitable, given that many goods and services satisfy the same
demand.
Indeed, the third point above (labour productivity) produces a
systematic tendency for goods to supplement services over time (for
cars and video recorders as opposed to public transport and cinemas). Thus,
there is no reason to expect the industrial sector to diminish in importance
in the long run.
In the case of newly industrialized or developing economies,
therefore, the "inevitability" of services sector primacy is not apparent.
Notwithstanding the potential of the Palestinian services sector,
- 11
international experience does not point to any one pattern of growth and
development that would be likely to prevail
the process of economic
development in the Palestinian territory. 11/
A.
The Palestinian services sector prior to 1967
Up to 1948, both the West Bank and the Gaza Strip were highly
into the economic network of Mandate Palestine.
It was in the north and
central coastal areas of Palestine that economic activity was most
The economy of the inland West Bank and the coastal Gaza Strip was by and
large based on
ture.
The West Bank,
a dry farming area, sold
much of its output to the coastal urban centres. The Gaza Strip was primarily
a citrus producing area. Both areas also found an outlet for their surplus
labour in the central coastal area.
It is estimated that up to 1948, at least
80,000 persons from the West Bank worked, both seasonally and for extended
periods, in the coastal urban centres.
The Gaza Strip was also
economically integrated into the coastal
to the north and it is
estimated that around 80 per cent of the Gaza area population depended on
contacts with the rest of Palestine for their livelihood. 13/
With the creation of Israel in 1948, the West Bank and the Gaza Strip
were severed from the rest of Palestine. This had far-reaching implications
for both territories. Their economy lost geographic and functional
continuity, and the population (both indigenous and refugee) was disoriented.
The West Bank went under Jordanian rule, while the Gaza Strip was governed by
Egy~t.
Economically, both the West Bank and the Gaza Strip lost access to
their primary markets and to shipping ports and routes, the source of supply
for a wide range of products. Their transportation networks and communication
systems were disrupted and rendered redundant; access to jobs for many of the
indigenous inhabitants was hindered and many border villages lost much of
their agricultural land. Between 1948 and 1967, both the West Bank and the
Gaza Strip faced the difficult process of reorienting their economies to
Jordan and Egypt, respectively. Both Jordan and Egypt were more concerned
with the political stability than with the economic development of these
areas.
When the west Bank and the Gaza
were occupied by Israel in 1967,
their economy was largely underdeveloped, characterized by a
population
as compared to the limited natural resources. Both the West Bank and the
Gaza Strip could be characterized as primarily agrarian, with a stagnant
industrial sector and a large, but rudimentary services sector. The latter
was dependent on the existence of
aid and relief
, government
administration and large mil
forces, plus tourism (in the West Bank),
remittances and unregulated border trade (in the Gaza
oriented towards Palestine but
Up to 1948, Jordan was
after 1967 the lilest Bank became economically dependent on Jordan. 14/ Over
half of the labour force of the Nest Bank was employed in traditional
agriculture, which was characterized by low productivity and labour-intensity,
displaying high levels of under-employment. The bulk of the industrial sector
was also labour-intensive,
in mainly handicraft and traditional
manufacturing which employed
members, and also
significant
- 12 -
levels of under-employment and disguised unemployment.
There were a few
small scale manufacturing establishments, such as soap manufacturing in Nablus
and textile workshops in the Bethlehem area.
By 1967, the Jordanian services sector
that of the West Bank)
had become the main contributor to national output and a major absorber of the
labour force.
Available statistics indicate that 40 per cent of the Jordanian
labour force depended economically on foreign aid.
The main reason for
the services sector absorbing the largest share of employment was related to
the developmental stage reached in Jordan
this period. The higher
levels of income and standard of living associated with this sector prompted a
shift of employment of labour from
and industry into the services
sector.
Prior to 1967, the services sector in the West Bank accounted for more
than 60 per cent of GDP, and employed some 33 per cent of the total labour
force.
Trade (both wholesale and retail) was the main activity within
the private sector, followed by the tourist trade.
The bulk of employment in
services was accounted for by the public sector including civil service,
education, health, and security services. However, the high contribution of
services to GDP was due to the
tourism industry, which accounted for
a significant
substantially the import
bill.
Official statistics indicate that in 1965, one fifth of those working in
the trade and services sector were self-employed. ~/ Employers formed
2.2 per cent of the total number of those working in the services sector,
while under 80 per cent were
Traditional trade services
mainly of small businesses including shop owners, news agents, and
large number of whom were
Trade-related services comprised the
majority of the medium-sized
owners and wholesale distributors, and
constituted about 6.6 per cent of all those employed in the branch.
It is
difficult to determine the relative significance of employment in trade and
non-trade services branches, as a
number of labourers work without
registration.
In addition, official statistics do not reflect the level of
activity or output of the traditional services branches, in general, and the
traditional trade-related branches, in particular. This is partly due to the
seasonal nature of the traditional sector, such as farming activities which
involve the farmer in the sale of his product, and which are usual
classified under the
sector.
Jordanian statistics also indicate that almost 17.5 per cent of the
transportation branch
the self-employed group, such as taxi and
truck drivers who were at the same time owners of their vehicles.
This branch
employed a larger number of
labourers than the trade sector.
Of the total number of workers in services delivered by the
sector (such as restaurants, hotels, and entertainment), 90 per cent
represented hired workers while the rest were self-employed.
with
employees of the trade branches, they accounted for more than 67 per cent of
those working in the services sector, excluding those classified as
"unidentified activities", i.e. mainly security forces.
Some 8 per cent of
the labour force of the West Bank was employed by the army prior to 1967.
13
2.
Gaza Strip
By 1948, the Gaza Strip was left with an area of about 350 square
kilometres and a total population of around 280,000 (including some
200,000 refugees). 19/ In June 1967, the population totalled 354,000 of
whom 207,000 were refugees. During the 1948-1967 period, Palestinians from
Gaza Strip emigrated to neighbouring Arab countries in search of employment.
Between June 1967 and December 1968, up to 100,000 persons were displaced from
Gaza Strip to Jordan, Egypt and the Gulf States. Despite the steady
population outflow, the Gaza Strip has maintained one of the highest
population densities in the world.
In 1967, the population density was over
1,000 persons per square kilometre.
The large population, which was disproportionate to the resources
available to sustain it, along with its isolation from the rest of Palestine,
Gaza Strip in a critical situation. According to S. ROY, the Gazan
economy just after 1948 "was on the point of col
". 20/ The main
sources of income ·."ere agriculture /
/ trade, public services and
remittances from abroad.
Agriculture accounted for more than 30 per cent of
gross national product (GNP), and 40 per cent of employment by 1967. With
most of its cultivable land gone to Israel, the agricultural sector could
not absorb the labour force. 21/ Land became a source of income for only
14 per cent of all households.
The services sector soon became the predominant area of economic
activity. The rapid
of the services sector was due to the
presence of the Egyptian military forces, the united Nations Emergency Forces,
the United Nations Relief and Works Agency (UNRWA) and forces of the Palestine
Liberation Army.
These provided sources of employment and contributed to the
GDP of the Gaza Strip until 1967 when all but UNRWA left. As a result, the
services sector was
affected. Likewise, much of the trade and tourism
in the Gaza
that had been encouraged by lower customs duties in Gaza
than in Egypt, as well as
the unregulated border trade with Egypt, alse
disappeared af~er 1967. Thus, the bulk of the services sector in the
Gaza Strip between 1948 and 1967 was built around non-permanent institutions.
In 1965, the services sector employed 56 per cent of the labour force, and
generated 55 per cent of GNP. 22/
The industrial sector in the Gaza S
,prior to 1967, was
characterized by small workshops engaged in production of traditional crafts.
Moderate-sized enterprises were few, and were involved mainly in citrus
, citrus related processing and soft-drink bottling.
This sector
employed between 3,000 and 6,000 persons (a wide variation due to the seasonal
dependency of citrus packaging and processing
), and contributed
about 4.2 per cent to GDP. 23/
reflected its depressed economic conditions.
Employment in the Gaza
The labour force participation rate maintained its low level, standing at
15 per cent in 1968. 24/ This low participation rate was attributed to
Ilmited economic activity in the Gaza Strip, and to the high rate of
emigration of young men.
By 1967, only 39 per cent of the age group between
20 and 44 years was male while 61 per cent was female.
In addition, more than
half of the population was below the age of 15. 25/ In 1960, it was
estimated that around 34 per cent of the total labour force was unemployed (or
- 14 -
some 24,000 persons). Among the refugee population, the unemployment figure
for those of working age was estimated at 64,400 persons or 83 per cent of the
refugee labour force. 26/
B.
Services in the Palestinian economy after 1967
While developments in the Palestinian economy since 1967 reveal a
significant growth in the services sector, this growth has not followed the
classical path of services emerging as the tertiary sector in the process of
economic development as experienced in developed economies. Whereas in the
latter the process of economic development has been associated with
progressive industrial growth and economy-wide growth in productivity, the
Palestinian economy's industrial sector has remained stagnant, contributing
only around 9 per cent to gross domestic product (GDP) in 1987, with declining
productivity. 27/ Whereas growth in income in the developed economies was
generated internally, growth in income in the territory has been induced by
external factors, primarily demand for Palestinian labour in Israel and the
Gulf States.
The slow pace of development in the economy of the West Bank and the
Gaza Strip since occupation has been mainly due to the lack of a central
planning authority, coupled with the interplay of a multitude of indigenous
factors that also hampered growth and impeded the functioning of a free
market. ~/ The consequences for the economy of the West Bank and the
Gaza Strip have been the intensification of structural fragmentation
manifested in the weakening of linkages between sectors, the stagnation of the
"extractive" or primary sector, the deterioration of many branches of the
"transformative" or secondary sector, and the inevitable growing share of the
services or "tertiary" sector.
It is therefore evident that the services
sector of the economy of the Palestinian territory has not developed along the
path experienced by industrialized countries, reflecting growth in demand for
"intermediate" services from elsewhere in the economy, and a growing welfare
function of the State.
The contribution of the primary and especially the secondary sectors to
the growth and development of the palestinian economy has been minimal, as has
been their contribution to the growth of the services sector. This has
inhibited their coherent and sustained development, which in turn has hampered
the development of certain service branches, such as producer services.
On
the other hand, the same process has promoted the growth of wholesale and
retail-trade services.
Another discrepancy, characteristic of the services sector in the
Palestinian economy, concerns the internal structure of the services sector.
Although variation in the structure of services exists within and between the
modern "service economies", these variations are generally minimal. ~/ In
the developed industrialized economies, the bulk of growth in employment
within the services sector is usually in public services. 30/ This is
followed in descending order by producer services (including banking,
insurance, real estate, whose growth is derived from increasing demand for
"producer" services), distributive services and finally personal
services. 31/ For example, between 1973 and 1979, producer services
annually contributed between 17 and 22 per cent to the increase in employment
in the United States, and from 1979 to 1984, their contribution varied widely
- 15 -
between 17 and 44 per cent. However, in 1989, distributive services in the
United States contributed 22.5 per cent, personal services
17.6 per cent,
services - 17.2 per cent, and public services
11.9 per cent of
Comparable disaggregated data on services are not available for
countries of Western Asia. However, existing data do indicate wide
variations in the relative
of services among the countries in the
ESCWA
Looking at economies that depict features similar to the
Palestinian economy, distributive and producer services combined accounted (on
average
1982-1984) for 38 per cent of GDP in Jordan, 50 per cent in
Lebanon and 28 per cent in Yemen.
For the ESCWA region as a whole, the
average was 28 per cent. When the definition of services is broadened to
include
ic/community and personal services (i.e. including all four
categories referred to in this study) the respective shares of GDP rise to
66 per cent, 74 per cent and 47 per cent, with the average for the
standing at under 39 per cent of GDP. The large share of public and community
services is notable in all these cases.
By contrast, in the West Bank and the Gaza Strip growth in the services
sector, both in terms of its contribution to GDP and to employment, has been
in the distributive services, concentrated in retail and wholesale trade. The
other services branches within the Palestinian economy have experienced
marginal or zero growth, reflecting their meagre contribution to GDP and
employment.
Since 1967, the contribution to GDP of public services has
decreased, and its share of employment has increased only marginally.
Table 2 presents official data which group services according to standard
national accounts definitions with some deviations: public and community
services are combined with electricity and water in one sector (corresponding
to the
Singlemann, "social services" category), while transport,
trade and other services (corresponding to the distributive, producer and
personal services categories) are combined with "errors and omissions".
Despite the inclusion of some non-service items, these series confirm the
broad outline of limited structural change in the Palestinian economy
since 1967. In its most basic form, this has entailed a major decline in the
primary sector in favour of secondary sector
to begin with
(concentrated in construction) followed by a
significance of the
services sector (concentrated in the private services branches) .
By 1972, when the domestic economy had reoriented itself to the
post-1967 conditions, agriculture, including forestry and fishery, constituted
over 35 per cent of GDP, the secondary sector (
and construction)
totalled around 17 per cent, while the services sector contributed
around 48 per cent.
The decreasing share of
, the contribution of
which to GDP had reached 22 per cent by 1987, was
for mainly by
the growing share of the secondary sector (construction) in GDP, which
attained 25 per cent in 1975 and has since stayed around that level, peaking
at 27 per cent in 1987. This has left the services sector as a residual
beneficiary in terms of its relative importance in GDP, which reached
over 50 per cent by 1987. However, a growing percentage of services has been
concentrated under
services (i.e. non-public/community services) ,
constituting 38 per cent of GDP in 1987 as compared to an all time low in the
share of public services of under 13 per cent.
- 16
The growth of output in services may be examined in terms of three
distinct periods until 1987 ~/: 1972-1975 with high rates of GDP growth
averaging 20 per cent and 16 per cent per annum in the West Bank and the
Gaza Strip, respectively; 1976 1980 with reduced growth at an annual average
of 5 per cent and 3 per cent, respectivelYi and, 1981 1987 with resumed
stronger growth at an average rate of 8 per cent and 5 per cent per annum,
respectively. These aggregate rates reflect strong growth in construction and
moderate growth in services in both regions in the first phase (i.e. at 21 and
11 per cent per annum, respectively); followed by weaker growth in all sectors
in both regions in the second phase, with services in the West Bank growing at
the highest sectoral rate in the third phase (i.e. at 13 per cent annually),
alongside resumed expansion of construction output in both regions.
The main
impetus to services growth in the West Bank in this third phase came from
private services, which grew at an average of 14.5 per cent per annum, double
the average annual growth rate of public services.
Indeed, growth in private
services branches and in the construction sector constituted the prime
economic growth poles until 1987. By 1987, private services branches
generated $634 million out of a total GDP of $1,690 million.
In the
West Bank, these branches accounted for over 41 per cent of GDP, much of which
was concentrated in distributive and some personal services fuelled by growing
external personal incomes and exaggerated rates of final private consumption.
In the period 1988-1990, average annual decline in GDP was estimated at
around 10 per cent and 15 per cent in the '''est Bank and the Gaza
respectively.
This reflected declines of between 6 and 25 per cent per
annum in different sectors, except agriculture in the West Bank which expanded
by 14 per cent annually in this period.
The sectors most affected were those
which had benefited during the expansionary period of the mid-1980s until the
outbreak of the intifada. Thus, construction in the West Bank and the
Gaza Strip fell precipitously, followed by services, with relatively less
decline in industry in both areas and in agriculture in the Gaza S
A number of major factors can be seen to have influenced the especially
difficult circumstances facing Palestinian services since 1987. These
include: the domestic and external market conditions affecting distributive
services; the tense security situation affecting most personal services
(especially tourism) i the heightened uncertainty and conflict regarding the
status of the territory which further depressed many producer services; and,
the general weakening of central administration of the territory since 1988,
manifested in cutbacks of government expenditures on social and public
services.
Producer services have been subject to regulatory restrictions and the
absence of market conditions conducive to industrial growth. The economy has
been deprived of financial institutions which could mobilize and allocate
funds into productive investment. coupled with constraints facing the
industrial sector, such as difficulty in obtaining permits to establish firms
and limiting access to international markets, this has proscribed industrial
growth, thus impeding demand for producer services.
The growth of distributive services within the Palestinian economy, and
the stagnation of the primary and secondary sectors, are reflected in the
"international" trade structure of the economy. Since J.967, the Palestinian
economy has increasingly become an import surplus economy. The import of
17
goods accounted for over 76 per cent of total imports in 1987 as compared with
73 per cent in 1971 for the West Bank, and over 78 per cent in 1987 as
compared to 82 per cent in 1971 of total imports for the Gaza Strip. 37/
In his study of the Israeli service economy, Ofer concludes that "an
import surplus which consists for the most part of goods therefore induces the
economy to shift from the production of goods to the production of services in
order to achieve a balance between goods and services". JJ!/ It may be
argued that this sort of pressure, combined with restrictions on internal
development in general, and industrial development in particular, has
contributed to the growth of distributive services in the Palestinian economy.
However, as there is neither an inherent tendency for an import surplus to
induce the economy to shift towards services, nor is there a "natural balance"
between goods and services production, the main impetus to distributive
services growth in the Palestinian economy has been the restriction on
secondary sector development coupled with externally derived income and
demand.
This broad shift follows in part the trend in other developing countries,
whereby a large segment of the labour force has moved directly from the
primary sector to the services sector, and ..... services sector development
has also been affected by the heavy reliance of many developing countries on
the production and export of a single primary commodity or a few of
these ... ".
However, in the Palestinian economy, this phenomenon is
reflected more in the growth of public services than of other services which
required less skills. Also, in the case of the Palestinian economy, the move
of labour and share of GDP towards services was paralleled by steady growth in
output and employment in the construction sector.
Export of labour services, both to Israel and the Arab States, has
sustained the large merchandise trade deficit over the years in the economy of
the occupied territory, and at the same time, contributed significantly to the
growth of per capita disposable income. Thus, growth in the services sector
of the Palestinian economy is correlated with (if not dependent upon) a heavy
reliance on the export of labour. For the West Bank, the wages of
Palestinians working in Israel accounted for around 25 per cent of gross
national product (GNP) since the early 1970s.
In Gaza Strip, the dependence
on export of labour services is even greater, whereby almost half the employed
population of the Gaza Strip worked in Israel (by the 1980s). The prevailing
levels of income of the occupied territory do not accurately reflect the real
level of domestic economic development, in fact, they over-estimate it. Thus,
per capita GNP is not always the most relevant indicator of the level of
Palestinian development, nor of the potentials of Palestinian services for
sustained growth and development.
c.
Intersectoral linkages
Some forward and backward linkages developed between the services sector
and other sectors in the Palestinian domestic economy, but overall they have
been minimal and unsustained.
Since 1967, the primary sector in both
the West Bank and the Gaza Strip has experienced continuous decline in its
share of employment. Only limited capital accumulation has taken place and
its share of expenditure on GDP remained subject to sharp cyclical
fluctuations. Meanwhile, the secondary sector has stagnated in its
- 18 -
contribution to GDP, and its share of employment has increased only
marginally. Neither did the surplus labour agrarian economy stimulate growth
in the services sector, nor could the secondary sector develop in a manner
that encouraged new or expanded services. since 1967, the development and
growth of most branches of the services sector have been most clearly related
to the export of labour to Israel, which in turn has generated more income for
a larger number of people, allowing for greater consumption of imported
manufactured goods.
Nevertheless, some relations between the agricultural sector and services
may be discerned.
Since 1967, the number of tractors employed in agriculture
has increased significantly, rising from 459 in 1970 to 3,972 in 1987 in the
West Bank, and from 36 to 734 in the Gaza Strip. This mechanization has
contributed to the growth of repair, rental and maintenance services.
Furthermore, the increased use of capital inputs such as fertilizer,
pesticides and new seeds has led to the growth of retail and wholesale
suppliers of these goods, as well as specialists who advise farmers on their
use. However, with static market conditions affecting agriculture since the
late 1970s, these vital services have stagnated.
In some cases, service
activities linked to agriculture have declined, such as transport of domestic
agricultural output, which has suffered from the abandonment of land in favour
of work in Israel, and the deterioration of the terms of trade experienced in
agriculture vis-a-vis Israel.
Similarly, the transformative sector, comprising construction,
manufacturing and utilities, has developed with only limited reliance on
Palestinian distributive services branches, owing to the large proportion of
output that is marketed in/through Israel and the predominance of Israeli
distributive services suppliers. As noted previously, Palestinian producer
services have been primarily oriented to households rather than primary or
secondary sector producers. The performance of Palestinian producer services
such as engineering, insurance and accounting, as well as business services,
has remained weak, and their growth stunted, owing to the lack of demand for
such services by Palestinian agriculture, mining and manufacturing which
continue to operate within informal and traditional modes. The absence of
domestic market or other incentives to the growth of distributive and producer
services, coupled with their greater availability in Jordan or Israel, have
discouraged their development in the Palestinian territory. This has, in
turn, limited the development of dynamic and growth-inducing interlinkages
between services and extractive/transformative sectors in the Palestinian
economy.
Social and personal services (by definition) largely exclude active
intersectoral articulation.
In this case as well, much of the growth that has
taken place has either been in compensation for weaknesses elsewhere in the
branch (e.g. non-profit social services filling the gap in government
services) or has relied on demand generated in (and/or channelled through)
Israel (such as repair services, hotels, restaurants, entertainment and other
personal services).
D.
Contribution to employment
Employment prospects for the labour force of the Palestinian territory
remain bleak. On the supply side, the labour force has grown at a strong and
- 19
persistent rate, mainly because
over half of the population is under
15 years of age. With some 15,000 new entrants to the labour market annually,
at least 100,000 new jobs must be created in the territory by the end of the
decade, assuming that employment opportunities in Israel remain at the
prevailing level. The sectoral composition of the domestically employed
labour force confirms the broad outlines of structural change. The
shifts occurred before 1980, and changes since have been relatively small.
In
1989, some 175,000 persons, or 62 per cent of all those employed were working
in the territory, compared to 153,000 or 88 per cent of all employed in 1970.
Only around 40 per cent of those employed are salaried employees, most of whom
are in the services sector working for the Civil Administration and UNRWA.
Since 1967, the distribution of the Palestinian labour force by sector
has experienced significant changes as illustrated in tables 3, 4 and 5. The
major change in both the West Bank and the Gaza
was a shift in
employment from agriculture to construction and to services. Employment in
Palestinian
ture has fallen steadily from 39 per cent of the
domestically employed labour force in 1970 to 23 per cent in 1987. The share
of domestic industrial employment has meanwhile shown a moderate increase from
14 per cent to 17 per cent. 41/ In the West Bank, agriculture in 1970 was
the largest contributor to employment, accounting for 42 per cent of the
total. By 1987, its contribution had fallen to 26 per cent of total domestic
employed. During the same period, the share of employment in the services
sector grew from 34 per cent to 45 per cent.
In the Gaza Strip, the
same trend prevailed, with employment in agriculture fall
from 32 per cent
to 16 per cent and that in construction increasing from 5 per cent (in 1971)
to 8 per cent by 1987. Services accounted for 58 per cent of the total
employed in the Gaza Strip by 1987, as compared to 47 per cent in 1970.
During the first years of the intifada, this declining trend in
agriculture was halted and for a time reversed in the West Bank, as part of a
"return to agriculture" campaign and emphasis on the "home economy". However,
in the Gaza Strip,
the shortage of land and the
refugee population
with no access to land, the reversal of agricultural decline only took hold
once the authorities placed more stringent limits on workers entering Israel
from the Gaza Strip, especially since the 1990 1991 Middle East crisis.
Available data on the internal composition of services sector employment
do not permit differentiating between employment in the domestic economy and
in Israel. However, the bulk of the Palestinian services sector workforce is
employed domestically, leaving around 20 per cent of services sector
employment to take place in Israel in 1987. This is still a high rate as
compared to under 5 per cent in 1970. p~ examination of data available on the
internal composition of the total services sector workforce (in the territory
and in Israel) provides a satisfactory indication of the domestic services
employment situation. Accordingly, the share of distributive, producer and
personal services
in total employed Palestinian labour force rose from
22 per cent in 1970 to 26 per cent in 1987. In the same period, the share of
community and social services remained constant at around 13 per cent. While
the latter situation reflects the stagnation in the share of
ic services,
it nevertheless exhibits an annually increasing level of total employment more
or less in line with population growth. The growth of employment in other
services branches reflects mainly the increase of Palestinian employment in
Israel. This is confirmed by the above-mentioned growth in the proportion of
- 20
private services sector employment in Israel and the more prominent structural
shift in favour of the share of services among those Palestinians employed in
Israel as compared to those employed domestically.
Over the period, the trade, restaurants and hotels branch has maintained
its share of 13-14 per cent in the total employed, followed by transport and
communications with just over 5 per cent and other service branches under
5 per cent until the 1980s. By 1987, employment in the latter branches
(i.e. producer and personal services) accounted for slightly more of total
employed than that in transport and communications (i.e. reaching almost
6 per cent in 1987). The three private services categories have exhibited
slightly greater employment opportunities in the Gaza Strip than in the
West Bank, whereas employment in social and community services has been
slightly stronger in the West Bank than in the Gaza Strip.
Available data on occupational distribution do not refer solely to those
employed in occupations within the West Bank and the Gaza Strip, but also
include those employed in Israel. As such, they do not portray a clear
picture of the pattern of occupational development of employment in services
in the Palestinian territory. However, given that the labourers employed in
Israel are usually non-professionals and unskilled, except in construction, it
is possible to discern the broad outlines of employment trends in the services
sector. Table 6 gives a breakdown of employment by occupation for the
Palestinian labour force as a whole, i.e. those employed both in the occupied
territory and in Israel.
As is shown in table 6, the two categories which fall within the services
sectors, namely sales workers and services workers (transport and
communications) have marginally increased their share in total Palestinian
labour force since the 1970s. Together, these occupations grew from
16.6 per cent in 1973 to 18.1 per cent in 1987 in the West Bank and from
18.8 per cent to 19.9 per cent in the Gaza Strip. This structural rigidity is
mirrored in other categories which correspond to services and other sectors,
with administrators and clerical workers together constituting 3.5 per cent of
the labour force in both the West Bank and the Gaza Strip since the 1970s.
The same trend in occupational development is also noted in the share of
scientific, academic and other professional occupations in the West Bank (at
8 per cent since 1973) and in the Gaza Strip (at around 7 per cent) .
Meanwhile, the main structural shift has been in the relative shares of
occupations serving mainly the primary and secondary sectors.
Generally, available data on sectoral and occupational distribution of
employment do not Show a direct shift of employment out of agriculture and
into services. The process has been more complex than that. The period of
rapid agricultural decline (1970-1974) is characterized by an equally rapid
growth in the number of workers going to jobs in Israel (particularly
construction jobs) while Palestinian industry, construction and services show
very slow increases in employment. During 1975-1977, all sectors exhibit a
stagnant employment situation, with modest growth in domestic construction.
After 1977, rapid growth resumed in labour migration to Israeli sectors
(again, mainly construction jobs), slow but steady growth in domestic
construction and industrial employment and slow agricultural decline. Only
the services sector has picked up noticeably after 1979, with more rapid
growth since the mid-1980s.
- 21 E.
Capital formation in services
Official data on capital formation in services are not available as a
separate item.
Field data on services are generally deficient and there is
but scant information on indicators of investment in some services
branches. 44/ Only investment by government and local authority, private
investment in building and construction (grouping residential, industrial and
commercial construction) and in machinery and equipment, and changes in olive
oil stocks are itemized under capital formation.
Private fixed capital
formation in the Palestinian territory grew from an annual total of
$40 million in 1972 to $459 million in 1987 (table 7). 45/ This compares
with a slower growth and much lower level of government investment, which grew
from $13 million in 1972 to $95 million in 1986. Building and construction
works have accounted for the bulk of private and total capital formation in
the West Bank and the Gaza Strip.
Between 1976 and 1987, annual investment in
construction accounted for an average of over 80 per cent of total private
fixed capital formation. 46/
Capital accumulation in machinery and equipment in services has been
marginal, reflecting the weak performance of the secondary sector.
In 1987,
around 70 per cent of total Palestinian private capital formation was recorded
in the West Bank, slightly below the share of West Bank in Palestinian GDP in
that year.
Capital formation in the services sector in the West Bank and the
Gaza Strip depends heavily on private sector investment. Given the relatively
low levels of private non-residential investment in the territory, most
services sector growth in investment has taken place in retail and wholesale
trade (especially buildings and vehicles) which requires relatively little
capital formation as compared to the investment requirements of producer and
some personal services.
F.
Services and the balance of payments
The nature of services (intangible, non-storable and non-transportable in
most cases) coupled with the lack of detailed statistics on individual service
activities make it difficult to undertake inter-country comparisons of
productivity and competitiveness in international service operations.
It is
generally observed that a strong domestic services sector is essential for
developing a strong international presence in services. As strong services
sectors are generally interlinked with strong primary and secondary sectors,
comparative advantage or competitiveness in services may well be a function of
both the overall level of development of an economy and the development of the
services sector itself. While traditional factors such as capital, labour,
geography, cultural affinities with client markets, and political and
institutional factors will continue to strongly influence comparative
advantage in services, especially in developing countries, international
competitiveness in services is increasingly being viewed as being the result
of the possession of advanced information and communication structures and the
human and organizational skills needed for their further development and
application at home and abroad.
This generally has meant that, unlike goods, services production and
consumption are usually simultaneous operations, which explain why these have
remained largely domestically-oriented. While many services are likely to
remain outside the scope of international dealings, trade in other services is
22 being constantly enhanced by technological advances, particularly in the areas
of information and communications, which transnational corporations have been
exploiting to offer a wide spectrum of services alone and/or in combination
with goods on a global basis. Tables 8, 9 and 10 present the available
official data on the balance of payments of the occupied territory for the
period 1968-1987.
In the West Bank, import of services ranged from 23 per cent to
26 per cent of the territory's total payments for goods and services since the
early 1970s. In the Gaza Strip, services accounted for under 15 per cent of
total payments for goods and services in 1975, rising to 20 per cent by 1980
and to 22 per cent by 1987. On the credit side, the contribution of services
exports has been significant for the territory, accounting, by 1987, for
65 per cent of total goods and services exports from the west Bank and
67 per cent of total exports from the Gaza Strip. This structure is a
reflection of trade patterns that have developed in the territory since 1967,
that is, a significant import of merchandise, mostly from Israel, and export
of labour services, primarily to Israel.
As the tables show, the merchandise trade deficit of the West Bank has
been growing over the years, expanding steadily from $34 million in 1970 to
$405 million in 1987. However, in the Gaza Strip the growth in the deficit
has been more erratic, exhibiting stagnation or reversal in some years.
In
both regions, the trade deficit resulted from the growth of imports of
manufactured goods, which was compensated for, in part, by a surplus in
services, of which labour income was the main contributor. With the
availability of external incomes, and the absence of any direct constraints on
private consumption, merchandise imports flowed into the territory and the
current account balance has remained in deficit since 1967.
The export of services has been the main generator of external resources
in the current account, ensuring a surplus which grew annually until 1983.
Since then and in particular since 1987, the slower growth and in some cases
declines in receipts from this source (especially from labour services) have
had negative consequences for the current account position in light of a
continued growth in the merchandise deficit. Among the service items of the
current account, labour income from Palestinians employed abroad (mainly in
Israel) has emerged as the most important item generating the surplus.
Income
from the export of Palestinian labour from the occupied territory increased
from around $100 million in 1972 to $714 million in 1987. Labour exports
accounted for 89 per cent of total service receipts in 1972 rising to
93 per cent by 1987.
In the Gaza Strip, dependence on labour services export
is most noted, with receipts from labour exports rising from $153 million in
1975 to
10 million in 1987, almost a six-fold increase, as compared to a
corresponding four-fold increase in the West Bank.
In the goods and services account, all items other than labour services
have been in deficit since 1967 (except for investment income for the
West Bank in some years).
This reflects the narrow productive base and the
lack of diversification within the economy, including the services sector.
Notwithstanding the positive income aspect of the labour services exports, it
highlights the weakness of other tradeable domestic services, the exports of
which only rose above $50 million in 1987, after which receipts fell
the intifada. Furthermore, the significance of labour exports to Israel as
- 23 -
the generator of external resources has rendered the Palestinian economy
dependent on the economic situation in Israel. With the stagnation in the
oil-producing economies of the region since the early 1980s, Israel has become
the main employer of Palestinians outside the territory, with income from this
source accounting for over 90 per cent of labour income receipts by 1987.
Services provided to Palestinians by Israelis in such areas as insurance,
transport and tourism have also grown from $85 million in 1977 to $205 million
for 1987. Nevertheless, while the territory's surplus in services remained
under $200 million until 1980, it subsequently increased to almost
$450 million in 1987. The ability of the territory to maintain a relatively
low dependence on external sources for the provision of insurance, transport,
tourism/travel and labour and professional services has been instrumental in
maintaining a surplus in services as a whole. The relatively low level of
service imports, however, coupled with the proportionately larger share of
service exports in the current account as compared to merchandise trade
exports, has contributed positively to the Palestinian balance of
payments. 47/
G.
Regulatory and related factors affecting services
Since June 1967, the Palestinian territory was administered by a military
government which assumed all legislative, executive, and administrative
powers. Numerous military orders and regulations have been introduced since
1967 which supplement, amend or supersede prevailing Jordanian and Egyptian
laws in the territory. 48/ These orders have affected almost every aspect
of life in the occupied territory, including a wide range of economic
activities.
Experience with the financial sector in general and the banking
system in particular is illustrative of the impact of the regulatory
environment on the scope and level of operation of the services sector. 49/
Other branches comprising the producer services sector, and including such
activities as insurance, transportation, real estate dealings and other
services offered on the open market have equally suffered from numerous
Social services, in such vital areas as health, education,
constraints.
communications, and a range of welfare activities have also been constrained
owing to cumbersome regulations, lack of financial resources, inadequate
institutional prerequisites including technical and managerial cadre to ensure
the effective operation of these services.
The interventionist economic policy pursued since 1967 has resulted in
major changes in the structure and performance of the Palestinian economy.
These changes took the form of a decline in the share of agriculture,
industrial stagnation, persistent trade and payments deficits, marketing
bottlenecks, increased unemployment and large-scale labour migration. The
Palestinian natural resource base has been constrained, the financial sector
incapable of mobilizing resources and private consumption has been fuelled
mainly by non-domestic sources of income. The Palestinian economy was thus
restrained in its scope, scale and rate of growth, and its structure
fragmented by external economic pressures.
Factors that contributed to this
situation include unregulated access of Israeli goods to the market of the
occupied territory, minimal infrastructure development, impediments to
industrial development and to access to cultivated areas.
Accordingly, the
Palestinian economy grew increasingly dependent on the expanding Israeli
economy in numerous spheres. ~/ For example, the West Bank and the
-
24 -
Gaza Strip became the second largest export market for Israel after the
United States of America.
In 1987, imports to the Palestinian territory from
Israel were valued at over $580 million. 51/ During that same year, the
GDP of the occupied territory totalled under $1,750 million.
A similar situation is reflected in the sluggishness of the Palestinian
manufacturing sector, as the West Bank and the Gaza Strip constituted a
lucrative market for Israeli industrial output with which many Palestinian
producers found it difficult to compete. With the decline in the primary
(extractive) sector and stagnation in the secondary (transformative) sector,
demand for producer services did not grow and supply did not expand. Spurred
by the employment of over 100,000 Palestinians in Israel until 1987, aggregate
demand grew steadily, including demand for distributive services, such as
retail and wholesale trade, and to a lesser degree transportation.
H.
Complementarities and regional trade in services
At first glance, it may appear that socio-economic links between the
Palestinian territory and its neighbours, especially Israel, are
complementary.
Israel, an advanced industrial country, has been mainly short
of unskilled labour while the occupied territory, with a much less developed
economy, has had surplus labour. However, the problem with this
complementarity is that the flow of funds generated by the export of surplus
labour has not been channelled into productive investment. That is, the
long-term potential benefits of these surpluses could not materialize within
the Palestinian economy. Furthermore, the persistence of surplus labour in
the territory has not been a function of endogenous factors alone, but has
also been the result of a constrained environment affecting marketing and
investment in various productive areas of the economy. These and other
factors have impeded growth in the economy of the West Bank and the
Gaza Strip, and checked the expansion of their capacity to absorb surplus
labour. Thus, the "complementary" relationship between the occupied territory
and its most advanced and dynamic neighbour, i.e., Israel is most simply
depicted by an exchange of labour for goods. Palestinian surplus labour has
met Israel's labour shortages while increasing import of goods has compensated
for the territory's deficient productive capabilities. Recent developments in
Palestinian and Israeli economic relations are expected to deal with these and
other issues of interest to both sides.
A somewhat different complementarity between the Palestinian economy and
the neighbouring Arab countries is noted in the field of services, which
derives from a variety of factors including the overall pattern of resource
endowment, geography, and differences in stages of development, levels of
skills and education. Though detailed and comprehensive statistical evidence
to substantiate the importance of services in the regional context is scarce,
it may be observed that intraregional service flows have had a strong impact
on the overall development process and on the level of output, employment and
balance-of-payments situation of both the exporting and importing countries.
The regional market, moreover, is expected to assume added significance as an
outlet for the export of new services being developed or envisaged by some
countries.
The most important impact of services in the regional context, and
probably the most elusive to quantify, has come from IIlabour-embodied"
-
25 -
services which are associated with the movement of Palestinians between
countries and which are "extracted" in the country of destination. Services
provided by "imported" manpower have spanned virtually all aspects of economic
and social life ranging from highly paid sophisticated occupations, such as
medical care, consulting and engineering services, to manual occupations at
the lower end of the occupational scale.
In return, the labour-providing
countries have benefitted from the opening up of more remunerative employment
opportunities for their manpower, and the associated income and foreign
exchange flows which have exerted a profound influence on the course and pace
of their socio-economic development.
In this respect, Palestinian skilled and
semi-skilled labour has served widely throughout the Arab region since 1948,
and especially since 1967.
An important service with a regional dimension in which Palestinian
entrepreneurs have also been involved is related to the movement of goods.' A
significant portion of merchandise trade entering or leaving the region and of
intraregional trade is in the form of transit trade.
In addition, transit
services have been associated with the export of crude oil through pipelines
linking the production sites and export terminals on the Mediterranean, and
more recently on the Red Sea, and overland. Transit services have benefited:
the countries of passage by generating income (fees, royalties, etc.) and
employment; the countries of destination by reducing the cost of importing
and, in some cases, providing the only means of obtaining goods; and the
countries of origin by saving on transportation costs and overcoming temporary
obstacles to exporting via normal channels. However, despite the existence of
agreements intended to facilitate transit trade and/or govern the distribution
of benefits, political factors and conflicting national interests have often
disrupted the smooth flow of goods in transit and raised transaction costs.
The regional dimension has also played an important role in the
development of tourism in the countries of western Asia, including the
Palestinian territory.
Lebanon, Egypt, Syria, Jordan and Bahrain have, for
different reasons, offered a strong attraction to the nationals of other
countries in the region, resulting in significant foreign exchange earnings.
At the same time, the experience of these countries in the various facets of
tourism (hotels, restaurants, entertainment) has been helpful in setting up
and strengthening the touristic infrastructure in the region as a whole.
In
this the "demonstration" effect has played an important role. The impact of
the Baalbeck cultural festivals in Lebanon on Jarash festivals in Jordan is
one such example. The regional potentials of the Palestinian touristic sites
and Palestinian tourism branches have been largely stifled since 1967, but
Palestinians' long experience in receiving and partially absorbing
international tourist flows through Jordan and Israel is a significant asset.
Among the other important services whose impact spills over national
frontiers are consultancy and engineering services, business and management
services, and public administration services. Consulting and engineering
services supplied by Palestinian entrepreneurs and other Arab nationals have
contributed to the efforts of the Gulf States to improve their physical
infrastructure. Business partnerships, mainly with Lebanese, Jordanian,
Syrian and Palestinian counterparts, have helped to meet the shortage of
managerial cadres in oil-producing countries.
Public administration support
se~vices, in the form of advisers and consultants from Egypt and Jordan and
- 26 -
the Palestinian territory have also been instrumental in meeting the growing
requirements of the Gulf States in the area of public administration until
they could develop their indigenous capabilities.
Services have been the concern of numerous intergovernmental agencies,
professional federations and training institutions, established mainly within
the framework of the League of Arab States and the council of Arab
Economic Unity. These include, the Arab Standardization and Metrology
Organization, Arab Council for civil Aviation, the Gulf Organization for
Industrial Consulting, Arab Tourism Union, Arab Postal Union, Arab
Telecommunications Union, General Federation of Arab Insurance Companies,
Arab Air Carriers Organization, Federation of Arab Banks, Arab Seaports
Federation, the Arab Maritime Transport Academy and the Arab Institute for
Training and Research in Statistics. 52/ At the subregional level, the
Gulf cooperation Council countries are trying to coordinate activities in the
field of services through sectoral committees. At the bilateral level, a
number of agreements have been concluded relating mainly to air and land
transport, transit and tourism.
Palestinian professionals have been active in
the establishment and operation of many of these cooperative activities while
representatives of Palestine have participated as full members of most of
these regional intergovernmental institutions since the mid-1970s. More
serious and intensive efforts are needed effectively to integrate the
Palestinian territory in general and its services sectors in particular in the
operations of these regional organizations.
- 27 -
Chapter II
THE STRUCTURE AND PERFORMANCE OF SERVICES BRANCHES
Services enter the economic cycle either as final outputs, or as inputs
such as "producer services" into the production of goods and services. As
inputs, they also provide the means by which production reaches users in both
domestic and foreign markets.
As such, they are indispensable for the
interdependent functioning of domestic and world markets and for promoting the
international division of labour.
As a key component of the overall
infrastructure of a country, adequate services in such areas as
transportation, communications, trade, finance, insurance, business services,
and public administration are critical for the growth and development of other
productive and service branches. Using the broad system of classification
already introduced in previous chapters, the following sections review
available data on those branches which may be identified as the most
significant services in the occupied territory.
A.
Distributive services
1.
Transportation
The transportation sector in the occupied Palestinian territory depends,
primarily, on demand and investment originating in the private sector.
Government's role is restricted to regulation of the transportation industry
and provision of basic infrastructure.
Generally, deficient capital
accumulation in this sector is compounded by a shortage of managerial skills
and knowledge, and an obsolete regulatory framework, resul
in poor quality
of transport services.
(a)
Domestic transport
Domestic public transportation services can be categorized according to
geographical areas served.
These are basically internal (within the urban
centre), regional (between villages and the regional urban centres) and
interregional (between the urban centres of different regions) .
The main providers of public transport are privately-owned bus companies,
and privately-owned taxis.
Bus companies are owned either by an individual
or a family, or by a partnership.
The ownership of taxis is more
variable. 221 A family or individual may own a fleet of taxis and hire a
driver, either on the basis of salary or salary plus commission. A taxi may
be owned by one person or several partners, who hire a driver (who may also be
a partner).
Finally, a taxi may be owner operated, that is, it is owned by
the driver.
Both bus companies and taxi owners must have a licence to work on
specific routes.
Since 1967, licences have been granted by the military
governor.
Bus companies and taxis based in east Jerusalem obtain licences
from civilian rather than military authorities, as they are governed by
Israeli laws.
This does not, however, mean that they face no restrictions.
Since 1967, very few new licences have been issued for new routes or for
increased service on existing routes.
- 28
In addition to licensing, the transport sector faces financial
constraints. Some bus companies own licences to operate a greater number of
buses such as Dir-Dibwan Bus Company, but the cost of increasing the number of
buses is higher than the potential returns. There is a constant increase in
taxes levied on the bus companies, such as value added tax, security tax,
income tax, road tax and route privilege tax.
In addition, licensing,
insurance and maintenance expenses must be added to operating costs.
Capital outlays on the transport infrastructure of the occupied territory
have been small. Most of the roads under the jurisdiction of the central
authority are generally in the same condition as they were in 1967. Only
repair work and general upkeep to maintain minimum safety standards of these
roads has been authorized. Every year teams of workers are sent out to major
roads to fill up potholes.
In many cases, the potholes reappear a month or
two later, and remain in need of repair until the next year.
In most cases,
this situation may not be detrimental to the Palestinian tourism sector, since
tourists remain largely confined to the Jerusalem-Bethlehem metropolitan area
where roads are generally of good quality.
The only roads in the occupied territory that have been improved or
completely re-built are either those that allow access to new settlements or
that allow Israeli settlers to by-pass Palestinian population centres.
The
cost of these roads has been mainly covered by the military government budget
for the West Bank and the Gaza Strip. Palestinians have benefited very little
from the newly-built roads which serve the settlements. The total length of
class "A" roads in the West Bank increased from 368 kilometres after 1967 to
731 kilometres by 1987. The additional 363 kilometres of new roads were
aligned to conform to Israeli geo-strategic considerations, that is, east-west
axes linking Israeli settlements in the occupied Palestinian territory with
metropolitan areas in Israel, thus rendering them of little use to the
Palestinian population or to the Palestinian tourism infrastructure.
In 1990, some 84 bus companies operated 420 buses within the West Bank
and the Gaza Strip, of which, 360 operated along the various routes while
60 were licensed but inoperative. It is estimated that 1,000 drivers, workers
and employees are employed by bus companies in the West Bank. The companies'
bus routes were originally licensed during the British Mandate period and have
not been changed radically since. The distribution of buses according to
their scope of services is as follows: 54/
Buses operating urban (internal) routes:
36
Buses operating on regional routes:
269
Buses operating interregional routes:
115
As table 11 shows, the number of taxis increased from 828 in 1970 to
942 in 1987 in the West Bank. The number of buses increased from 394 to 614
over the same period. Table 12 indicates that in the Gaza Strip, the number
of taxis decreased from 790 in 1980 to 773 in 1984, and showed no change up to
1987. The number of buses increased from 28 in 1970 to 68 in 1987. The most
pronounced increase has been in private vehicles: 1,626 in 1970 to 39,091 in
1987 in the West Bank and from 1,293 to 18,761 in Gaza Strip over the same
period. The growth in private transport vehicles and the stagnation in public
- 29 -
transport vehicles, is due to heavy regulations on mass transport and the
availability of moderately priced, second-hand vehicles in Israel, a major
source of supply for Palestinians.
Internal transport networks have been established in the major urban
centres of the occupied territory which form the hub of regional trade;
Nablus, Jenin, Tulkarem and Qalqilia in the northern area of the West Bank,
Ramallah-Bireh and Jerusalem in the central area, and Bethlehem and Hebron in
the southern area. For the Gaza Strip, Gaza City, Khan Yunis and Rafah are
the main urban centres.
Internal transport of people and goods within these
urban centres is served by privately-owned bus companies, in addition to the
services of up to five private taxi companies.
The transport of goods within urban centres
in both the West Bank and
the Gaza Strip
is carried out by a variety of vehicles, ranging from
modern trucks to mule-drawn carts or hand carts. Between these extremes, a
variety of vehicles are employed, the most popular being double cabin pick-up
vehicles. These vehicles transport anything that can be loaded onto them,
from sheep and donkeys to cement, steel and gravel. However, there are
usually two rates:
the Israeli Government rate and the company rate, with the
latter considerably lower. Rates are established according to distance, and
load (that is, a double cabin pick-up charges a standard fee, as does an
eight-ton truck). The rates charged move in line with the price of fuel but
are not structured on a transparent basis.
Regional transportation services connect the eight regional urban centres
of the West Bank with the villages scattered around them, and in the
Gaza Strip, the three major urban centres are thus linked to villages and
surrounding
camps.
Bus
monopolize the routes they operate. However, the number of
buses that
can run on a specific route is determined by their licence.
For example, the Bir-Zeit Bus Company serves the route between Ramallah, a
regional urban centre, and the village of Bir-Zeit in addition to some
10 other villages in the vicinity, but can only operate a maximum of 19 buses
on this route. Obviously, the larger the village or the refugee camp, the
greater the number of daily trips connecting the village and the urban centre.
In the smaller villages, bus service is limited to one roundper day, as
in the case of Kufer Ein (population approximately 800), where a bus leaves
for Ramallahat 7.30 a.m. and returns at 2.30 p.m. Residents who wish to
travel at any other time must walk about three miles to the main road to catch
a bus or a taxi to Ramallah.
Privately-owned taxis connect Jerusalem with other urban centres and
camps in the West Bank and the Gaza Strip. These taxis are
viI
mostly diesel-engined, seven-passenger cars. The taxis wait in turn, at
locations, until they are filled with passengers before starting
The taxi fare is
a third or more higher than that of a
their
bus. Only villages with a significant demand have adequate service. Smaller
are served by fewer taxis and hence, a less
service to and
from the village. In addition, more than half of the
of the
West Bank do not have a taxi service and residents use the taxis or buses at
the
nearest to their viI
- 30 (b)
International transport
The Palestinian territory has been isolated from direct international sea
and air transport links since 1967. The West Bank, being land-locked, has to
rely on Israel and Israeli agents for sea transport. Prior to 1967, the only
airport in the West Bank, at Qalandia on the outskirts of Jerusalem, was only
capable of
small aircraft on internal flights from Amman. The
airport has been closed to Palestinian use since 1967 and now functions as a
domestic
for Israeli light aircraft in private, commercial and
military use. Since 1967, air transport for the West Bank population has been
accessible either through Lod Airport (now Ben-Guorion) in Israel or, across
the bridge, through Amman Airport.
On the Mediterranean coast, the Gaza
has not been allowed free use
of its seashore since 1967. Prior to that, a small commercial port served the
duty-free zone in Gaza Strip as well as the export trade between the
Gaza Strip and eastern European countries.
It has faced, since 1967, the same
conditions as the West Bank as far as air and sea transport is concerned and
is deprived of direct international air or sea links. However, the Gaza Strip
has a small fishing fleet of some 400 vessels of various size which catch
between 20 and 60 tons of fish a day.
Companies supplying domestic transport services to tourists visiting
or historic sites are located in east Jerusalem. Prior to 1967,
there were 3 companies providing transport for tourists, which increased to
11 in the mid-1980s. However, by 1990 only seven companies were in operation,
all located in east Jerusalem. The closure of a number of companies was due
to a variety of factors, including competition with Israeli bus companies, the
decline in tourism during the intifada, and financial and technical problems
culminating in bankruptcy. The number of buses owned by these companies
reached 140 by 1987, but decreased to under 100 by 1990. 55/
While there are no available data on the distribution of tourists by type
of transport or level of expenditure, items in the balance-of-payments
accounts of the occupied territory on transport and travel abroad can
to
show a general trend.
In 1970, transport payments by the territory totalled
$3 million, while no payments were made to the territory under this item. By
1987, payments by the territory for transport services abroad rose to
$46 million, while $18 million were received, leaving a deficit of almost
$30 million. 56/ During the same period, payments by the territory for
travel abroad rose from $8 million to $56 million, whereas
s increased
from $4 million to $15 million. There has been a growing demand for
international transport and travel services, but Palestinian entrepreneurs
could not provide these services directly and instead they have been obliged
to work through third
There has been a
trend since 1980 in the absolute value of
travel receipts and since 1968 in the proportion of travel
to total
receipts from services in the occupied Palestinian territory, as indicated in
table 13. In 1968, total travel receipts totalled $17 million; after falling
under $10 million for several years. Receipts again reached $17 million by
1980 only to fall again in subsequent years. Travel
as a percentage
of total services
dropped significantly from 77 per cent in 1968 to
under 10 per cent by 1970 and then continued falling to reach 2 per cent
- 31
in 1987. On the other hand, travel payments abroad increased in absolute
terms during the period 1971 1981 and then stabilized under $50 million during
the period 1982 to 1986.
2.
Communications, mass media! and information services
(a)
Telecommunications
The telecommunications systems in the West Bank and the Gaza Strip are
almost completely integrated with the Israeli network, and have been kept
under the control of the Israeli civil and military authorities for various
reasons but related mainly to security. Although integrated, there is a
functional differentiation between the efficiency and quality of services
provided to Palestinian and Israeli customers.
In 1990! there were 13 major
telecommunications facilities in Jerusalem! Nablus! Hebron, Gaza, Jenin,
Tulkarem! Qalqilia, Ramallah, Jericho! Bethlehem, Khan Yunis! Rafah, and
Deir-El-balah. These facilities provide local direct exchange telephone
lines, international telephone service through the international trunk
switching centre and telegraph services.
In the West Bank and the Gaza Strip, some 40 towns and cities are
connected to the major telecommunications facilities via direct exchange
devices. Around 40 other localities are served by semi-automatic exchange
boards with incoming lines directly connected to the closest major
telecommunications facility and manual switchboards for local connections.
Most of these facilities serve only a limited number of customers in each town
or village. About 40 additional localities are served by magneto-type devices
linked to only one or a very limited number of posts in smaller or more remote
villages and refugee camps. The total number of telephone lines in the
territory is estimated at around 45,000-50,000 lines. There is a limited
number of telex and facsimile services facilities.
The telecommunications system in east Jerusalem was connected and
integrated within the Israeli system only a short time after its annexation.
Consequently, the telecommunication services available to enterprises involved
in the tourism sector in east Jerusalem are of a satisfactory standard, with
direct access to international lines, telex, cable, and facsimile facilities.
Much of the central West Bank network is connected to the Israeli
exchange in Jerusalem; the Tulkarem and Qalqilya networks have been connected
to Israeli regions across the green line; the Hebron network is connected
to the Israeli settlement of Kiryat Arba and Gaza Strip is directly linked
to the neighbouring Israeli exchanges. However, only a small number of
Palestinian households have telephones.
In Hebron, for example, there are
only 2,000 telephones serving 70!000 residents, i.e. there is one telephone
for every 35 individuals, a rate which is only higher than the average rate
for the least developed countries (1 phone per 100 persons). 22/ The
situation is worse in the rural areas.
In the Bir-Zeit district! for example,
a central manual exchange system! dating back to the early 1950s, serves 100
subscribers in Bir-zeit and 17 other villages in the region with two lines.
Each of these villages has one or two telephones, in many cases out of order
since 1967. 58/ In these villages the only means of communication with the
outside world is via travel to the regional urban centre.
- 32 In the West Bank, only 37 towns and villages out of a total of around
400 are connected to the telephone networks, and of these only the major towns
are connected to an automatic system. The manual system is based on
technology inherited from the British prior to 1948, and requires the caller
to wait in queue until the local operator answers and takes the number, then
puts the call through and reconnects the caller to his party.
Before Nablus
was connected to the automatic system in 1985, it was often faster to travel
to Nablus and come back to Ramallah, or Bir-Zeit, than to wait for a telephone
call to go through.
(b)
Mass media
Palestinian mass media is concentrated in the printing medium.
Notwithstanding the impact of occupation policies on the Palestinian press in
the territory outside east Jerusalem, it has witnessed unprecedented growth
since the 1970s. By 1990, there were five daily newspapers, seven weeklies,
five bi-weeklies, and three monthly magazines in circulation in the territory.
Prior to 1967, only three newspapers were published in Jerusalem, and one in
Amman.
All Palestinian newspapers, magazines and other periodicals are published
in east Jerusalem. The publications are circulated throughout the West Bank
and the Gaza Strip, although occasional bans are enforced on some.
Publishing
in Jerusalem is favoured over other parts of the territory because the Israeli
Ministry of the Interior is entrusted with media supervision there. The east
Jerusalem media functions under Israeli laws, making it easier to publish
there than in other parts of the occupied territory which are subject to
military orders and regulations.
Nevertheless, Israeli press laws applied to Palestinian publishers in
Jerusalem have been restrictive with a high degree of censorship, especially
during turbulent periods. Censorship has generally dampened the incentive to
develop quality journalism in addition to the domestic political influences
brought to bear on the Palestinian press.
In the rest of the West Bank and in
the Gaza Strip, laws governing the press are more severe than in east
Jerusalem and thus there are no papers or magazines published there. The
military authorities have reserved the right to close a publication for as
long as conditions or security considerations dictate.
The Palestinian press employed in 1990 some 277 individuals on a full
time basis, of a total of around 312 journalists in the West Bank and the
Gaza Strip. The total work force in the press offices' management and
services departments was 600. There were about 50 press offices (Palestinian
and foreign) operating in the occupied territory, many of which had sprung up
since the start of intifada. Subsequently, the authorities closed down some
offices on grounds of security. 59/ Of the total 50 newspaper, magazine
and other press offices, 14 were located in east Jerusalem, and the rest
scattered throughout the West Bank and the Gaza Strip (mainly agency
representatives). These press offices either worked for particular newspapers
or agencies, or were freelance offices catering to the Palestinian and foreign
presses.
Under the occupation, other mass media, such as television and radio,
have not been accessible to Palestinian ownership and operation, primarily
- 33 owing to "security" considerations. So, Palestinians in the occupied
territory have come to rely upon the Jordanian, Israeli, Syrian and Egyptian
television networks for audio-visual news and entertainment. Television
viewing is licensed in Israel and fees are collected from all residents of
east Jerusalemi no fees are imposed elsewhere in the territory.
(c)
Information services
Information services in the occupied Palestinian territory are relatively
unsophisticated. This is the case with private, but more so with public
information services. The forms of information services available to
west Bank and the Gaza Strip Palestinians are limited to official Israeli
statistics, Palestinian university libraries and research centres, which are
either private profit-making or non-profit institutions.
University libraries cater to a limited segment of the population, mainly
students, and suffer from lack of funds to develop and enlarge their
information base.
In addition, Israeli authorities have banned certain
scholarly publications on Palestinian issues which are available freely in
Israeli universities. University research centres also face shortages of
funding for serious information gathering.
In addition, field surveys require
the approval of the military authorities, who have been reluctant to authorize
such activities.
Since the early 1980s, the Palestinian community has been aware of the
need for independent research and information-gathering. As a result, a
number of institutions have been established to meet this need, specializing
in development affairs, labour issues, human rights, legal affairs and other
academic or professional fields.
In the West Bank, there are 5 libraries
attached to universities, 13 to the municipalities and charitable institutions
in the different cities of the West Bank, and 2 libraries belonging to the
Catholic Mission. These libraries contain a total of 1.5 million books, and
employ over 300 people.
In the Gaza Strip, in addition to one university
library, there are five other libraries belonging to the different religious
and charitable institutions, totalling among them around 500,000 books and
employing over 300 workers and employees. All of these libraries
on the
support of international and local donations, and on collecting minimal fees
when lending books.
3.
Domestic wholesale and retail services 60/
(a)
Trade in agricultural commodities
From the farm gate, fresh output is channelled to the central municipal
markets scattered across the West Bank and the Gaza Strip. Many producers
also function as wholesalers. They transport their produce to the central
markets to sell to retailers or commission agents.
In the West Bank and the
Gaza Strip, more than 70 per cent of total agricultural domestic consumption
is exchanged through central markets. However, there is a significant
increase in agricultural output sold at roadside stands, where growers act as
retailers.
In short, farm-gate, wholesale and retail functions of
agricultural marketing are intertwined, owing to the enormous expense of
transporting, processing, grading, storing, and selling of goods.
- 34 -
In the Gaza Strip, commission agents perform a variety of functions,
including providing credit to farmers, determining farm-gate prices and
transporting produce to packers. These middlemen possess monopolistic
power in the marketing of citrus fruit.
Cooperative societies in the
occupied Palestinian territory have played a growing role in marketing
agricultural produce in both the local and export markets.
In the Gaza Strip,
four agricultural cooperatives concentrate their efforts solely on marketing
functions.
In the west Bank and the Gaza Strip, membership in growers' associations
is voluntary. Associations have no control over production, their main
function being to obtain a consensus among growers with respect to prices.
For agricultural commodities such as citrus, contracts are signed between the
growers and marketing companies which guarantee an agreed price, while the
association ensures that agreed quantities of citrus are delivered.
For other
crops such as vegetables, growers allocate their production between the
domestic retail market and export markets through agricultural cooperative
societies.
By 1989, there were 200 cooperative societies in the West Bank
(organized in district level associations) and 4 in the Gaza Strip.
In 1988,
eight district cooperative societies in the West Bank merged to form the
Agricultural Cooperative Union. This step was aimed at improving the
efficiency of those societies in the domestic and export marketing of
agricultural products.
In Gaza Strip, cooperative societies have succeeded in
improving their performance in marketing agricultural products including those
for export, as they received financial and technical assistance from
international non-governmental organizations (NGOs).
Investment in storage facilities, including cold storage, is an absolute
necessity for modern marketing requirements. These facilities contribute to:
adjusting the annual agricultural supply of fresh fruits and vegetables,
extending the marketing period for these perishable products so that they are
made available to consumers during most of the year and reducing export price
fluctuations.
In the West Bank and the Gaza Strip, cold storage facilities are not up
to the required level either in technical aspects or absorptive capacity.
Most storage facilities are obsolete; cold-storage capacity is still limited.
In 1990, there were eight cold-storage facilities with a six thousand cubic
metre capacity. More cold-storage facilities were needed so as to stabilize
prices of agricultural products.
In addition, many wholesalers rented
cold-storage space in Israel to adjust their sales in local markets. The
setting up of advanced cold-storage facilities requires a huge capital outlay.
This is aggravated by the high cost of borrowing capital and the lack of
credit facilities to farmers.
In addition, the measures and regulations
adopted by Israel and Jordan regarding the type and quantity of produce that
can enter their countries and the time when produce can be transported during
each season, have made major investments in storage facilities unattractive.
(b)
Trade in manufactured goods
Wholesale functions for manufactures are performed in the West Bank and
the Gaza Strip with varying degrees of efficiency. That could be attributed
- 35 -
to the regional economic disparities within the occupied territory, the level
of development and the marketing infrastructure. Generally, wholesale firms
in the occupied territory are fragmented with a few employees and relatively
weak resources in terms of both quantities and varieties of goods available
for marketing.
There are around 1.5 thousand wholesalers in the West Bank and
one thousand in the Gaza Strip, accounting for 1 per cent of total labour
force of both regions.
During the Gulf crisis of 1990/1991, many wholesalers
in the West Bank and the Gaza Strip applied for import permits from the Civil
Administration to make up for shortages in foodstuff supplies.
Data on retailing are not available for the West Bank and the Gaza Strip.
Some Palestinian estimates indicate that a retail outlet employed on average
only one person in 1987.
Furthermore, the average number of customers per
retail outlet was estimated to be very small, at about 100. Retailing in the
West Bank and the Gaza Strip, like other developing countries, is either
large-scale or small-scale. Large-scale retailers usually act as wholesalers
and distributors, indicating that the range of the retail activities can vary.
Minimal modernization in the retail sector has taken place, as reflected in
the existence of some supermarkets and larger-scale outlets in major cities.
By 1987, more than 65 per cent of West Bank and the Gaza Strip imports
from abroad (via Israel) came through Israeli import agents.
Most of the
importers in the occupied territory lack technical and marketing skills to
import directly from abroad. Many Palestinian importers found that it was
more convenient to import through Israeli agents who enjoyed some government
support, ensured that the Palestinian received shipments on time and avoided
lengthy security checks.
Import agents in the occupied territory act mainly
as distributors of Israeli and foreign goods.
However, large wholesalers are
engaged in direct importing both for their own outlets and for redistribution
to smaller wholesalers and retailers in the West Bank and the Gaza Strip.
Further useful insights may be gained from examination of statistical
data on wholesale and retail commerce in east Jerusalem, the main urban centre
of the Palestinian domestic trade sector. According to Jerusalem municipality
tax files, 61/ the number of Palestinian wholesale and retail trade
establishments in the east Jerusalem and old city central business district
grew from 946 in 1969 (of which 15 were wholesalers) to 1,287 by 1982 (of
which 56 were wholesalers). Retail establishments in 1982 were mainly:
cosmetics and souvenirs (413), food (322), clothing and footwear (261).
Some
20 to 40 establishments were engaged in each of the other retail branches
(building supplies, office supplies, electrical goods, furniture, books and
toys, home utensils and watches and optical instruments). According to data
from a field survey conducted in 1986, 62/ there were a total of
1,505 retail establishments in east Jerusalem (including a wider area than the
previously mentioned data).
These were mainly in souvenirs (435), food
supplies (418), clothing and footwear (278) with the other 350 outlets
concentrated in the other secondary retail branches.
The growth in
conspicuous consumption among Palestinians in the 1980s in Jerusalem has been
clearly reflected in the apparent growth of retail trade outlets in this
important centre of Palestinian commercial and economic activity.
- 36 B.
Producer services
1.
Financial services and institutions 63/
Financial intermediation - the function of providing easy access to
liquidity, mobilizing resources, and facilitating trade - is an essential
component of any economic development process.
It is essential that savings
be safeguarded and even more critical that they be channelled into productive
investment. Without investment, there can be no growth. Unless the sources
of investment are largely domestic, an economy can become increasingly
indebted to foreign Governments, private institutions or individuals
an
unsustainable situation in the long run.
Small open economies are subject to
numerous external shocks over which they have little control, and so prudent
macroeconomic management is crucial for their stability.
There has been no central authority in the occupied Palestinian territory
to take charge of macroeconomic planning within which a financial management
system can function.
Therefore, the severe external shocks to which the
economy of the territory has been subjected, cannot be promptly mitigated.
Fiscal policy plays no stabilising or allocating role and decisions concerning
monetary policy are taken by two central banks - the Bank of Israel and the
Central Bank of Jordan
both of which are (understandably) concerned with
financial and economic issues in their respective countries. The Palestinian
economy is neither fully integrated into the Israeli economy so as to take
advantage of its system, nor quite independent of it so as to be insulated
from the impact of adverse developments in Israel.
The financial sector in the West Bank and the Gaza Strip is weak and
largely fails to provide traditional functions of banking institutions. All
ingigenous banks were closed by the occupation authorities in 1967, and only
two branches of Arab banks were permitted to reopen, one in 1981 and the other
in 1987. Although weak financial systems are common in developing countries,
regulations peculiar to the occupied territory have combined with a public
mistrust of the banking system, resulting in the existence of a small and
debilitated formal banking sector. Moreover, sources of investment funding
depend largely on external income, and are thus subject to fluctuation.
In spite of the unstable political and economic situation, there is a
high demand for credit. This is attributed to inadequate banking services
especially for financial intermediation aimed at mobilizing savings and
channelling them to productive investment. Owing to the absence of a strong
formal financial sector, a fairly extensive "informal financial sector"
exists, composed of moneylenders, credit circles and the more formalized
cooperative societies and credit institutions. Whereas these actors in the
financial scene facilitate certain transactions, they cannot be expected to
substitute for a strong formal banking sector.
Until 1988, both Israeli banks and two Arab/Palestinian banks operated in
the territory along with a variety of formal and informal financial
institutions, ranging from cooperative societies and credit agencies to money
changers. None met the requirements demanded of financial institutions in the
West Bank and the Gaza Strip. Since 1988, Israeli banks have ceased operation
in the territory, further exacerbating the situation until recently when
- 37 -
additional branches of Arab banks were allowed to open and operate in the
territory. Salient developments in this vital branch of service are examined
in greater detail below.
(a)
Towards the end of 1984, 6 Israeli banks were operating 30 branches in
the occupied Palestinian territory. These banks served mainly as a source of
overdraft funds for trade transactions, continuing until 1987.
In 1984, only
8 per cent of total credit supplied by Israeli banks in the occupied territory
went to Palestinians, the rest was borrowed by Israeli settlers. 64/ More
recent data are not available, and it is difficult to obtain a breakdown
between Palestinian and settler deposits in these banks.
Israeli banks
charged between 2S per cent and 28 per cent interest on loans made to
Palestinians, and paid real rates of interest on deposits at 8 per cent or
9 per cent, making such deposits attractive. However, Palestinians tended to
hold only short term cash balances with these banks for the following reasons:
the high rate of inflation increased the
of risk in holding
accounts in Israeli shekels; Palestinians feared that accounts were subject to
scrut
leading to arbitrary taxation or even confiscation by the
authorities; and, many Palestinians refrained from dealing with Israeli
institutions owing to considerable social pressure to avoid such banks,
the fact that they were a valued source of letters of credit for many
Palestinian importers.
(b)
Palestinian and Arab banks
Prior to 1967, 8 banks, with a total of 33 branches, operated in the
West Bank, and 3 banks operated in the Gaza Strip (only one of which was
a local bank with 2 branches).
In June 1967, total assets of the banks in the
West Bank was put at lS million Jordanian dinars, with credit accounting for
10 million Jordanian dinars and a credit/deposit ratio of 70 per cent. By
1990, two non-Israeli banks operated in the occupied Palestinian territory:
the Bank of Palestine in Gaza Strip (it was not allowed to operate in the
West Bank) and the Cairo-Amman Bank in the West Bank (which was not allowed to
in the Gaza Strip). Neither could conduct operations in east
Jerusalem.
(i)
The Bank of Palestine
The Bank of Palestine was established in 1960 under the
administration.
It was closed after June 1967 but was permitted to reopen in
1981 without being allowed to deal in foreign exchange. Nevertheless, after
long negotiations and legal
, the bank was later
to deal
in foreign exchange and
denominated transactions including
letters of credit for
At the end of 1990, the total assets of the Bank of Palestine were
approximately $13 million.
The Bank's portfolio was managed very
conservatively: in 1990, total loans extended amounted to almost $2 million,
far below the demand.
The Bank's liquidity ratio (ratio of cash to
total assets) was 73 per cent, up from 48 per cent in 1984;
this was
three times the legal limit in Israel. The ratio of loans to deposits was
- 38 -
roughly 21 per cent, which, although twice as high as that of Israeli banks
operating in the occupied territory before the intifada, remains low by
international standards.
The constraints faced by the Bank of Palestine
the degree to which it has been able to intermediate
in the
financial market of the Gaza Strip and to contribute to economic development
in the area.
By 1987 the Bank of Palestine had not yet succeeded in
mobilizing available resources, however small, and allocat
them to needy
and priority areas, and it had thus not contributed to an increase in output
and income. 68/
(ii)
The Cairo-Amman Bank
The Cairo-Amman Bank, with headquarters in Amman, re-initiated operations
in the West Bank in 1986 with the opening of four branches. By 1991, the
Cairo-Amman Bank reportedly had a $40 million credit line, with $16 million in
loans outstanding. Of its total loans, 25 per cent were in default (that is,
falling behind by one to three payments). The bank charges 9 per cent for
loans, plus an additional fee of 3 per cent. Data on total assets of the bank
were not available at the time of
of this stUdy.
The CairO-Amman Bank has not been allowed to deal in foreign exchange
and is permitted to have deposits only in Jordanian dinars, paying an interest
rate of 3 to 5 per cent. However, as of 1992 the bank had reached its
ceiling on allowed deposits and was no
accepting new deposits.
Although the value of Jordanian dinars was considerably more stable than the
Israeli currency, it lost roughly 40 per cent of its value against the
United States dollar in the late 1980s. As the bank was not permitted to deal
in foreign exchange, it had no way to
so as to protect its customers
against exchange-rate fluctuations.
In addition, negative real rates of
interest on accounts in Jordanian dinars do not attract large deposits.
The Cairo-Amman Bank submits to dual regulation by both the Central Bank
of Jordan and the Bank of Israel, each of whose regulations, priorities and
measures may differ.
In addition, the Bank is not allowed by the Israeli
authorities to deal
with non-Israeli banks. This restriction places
the Bank at a competitive disadvantage with Israeli banks in offering letters
of credit. Therefore, for commercial purposes, some Palestinians avoid the
more expensive Arab and Palestinian banks and resort to the services of
Israeli banks, based in east Jerusalem.
(iii)
Development finance institutions
While no Palestinian development finance institutions exist, since 1967 a
number of Arab development finance institutions have invested in the
territory. Rather than serving as financial intermediaries in the traditional
sense, these banks have been a conduit of development funds,
from
Arab States. Under the guidance of the Jordanian-Palestinian Joint Committee,
the Housing Bank of Jordan, for example, extended more than 2,000 loans
totalling 13.8 million Jordanian dinar from 1981 to 1985 for the
and
construction of homes in the West Bank and the Gaza Strip. Since 1986, the
Industrial Development Bank of Jordan has managed a loan programme
primarily
for small scale enterprises
under a 1 million Jordanian dinar grant from the
- 39
European Community. A third Jordanian-based bank, the Bank for the
Development of Municipalities and Villages; had granted over 600,000 Jordanian
dinar in loans to 18 localities by the end of 1984.
(iv)
Cooperative societies
In the absence of a fully functioning banking system, cooperative
societies have taken on added importance in the occupied Palestinian
territory, particularly in the agricultural sector.
Cooperatives, which are
based on communal membership, are considered to have a potential to enhance
productivity at the local level. However, the role of cooperatives in
developing countries has not been always successful in this respect.
Cooperative societies in the territory have been an important
source of credit since the time of the British Mandate.
In 1966, some
238 cooperative agricultural societies operated in the West Bank comprising
more than 14,000 members and extending $1.6 million worth of loans.
In the
Gaza Strip, only 17 cooperatives with just over 2,000 members were operating
during the same year.
By 1978, the cooperatives performed only a few
activities. However, subsequently they have received extensive support from
bilateral and non-governmental donors.
The Agricultural Cooperative union is essentially a coordinating
mechanism for the 200 cooperatives still active in the occupied Palestinian
territory (with a larger number registered but dormant). Although many
cooperatives seem to have been the primary focus of donor interest and
funding, others, including women's cooperative societies, have received
substantially less funding even though they played an important role in
promoting small scale enterprises. Loans have been provided by the
cooperative societies to members for housing, purchase of equipment and
machinery (e.g. tractors, olive oil presses and the like) and physical
infrastructure, including irrigation canals and feeder roads in agricultural
areas. The cooperatives also provide such services as assistance in export of
goods and management of small scale development projects.
While significant support was provided by international donors to
Palestinian cooperatives until the early 1980s, since then funding levels have
decreased substantially. Of special concern to donors has been the relatively
low proportion of equity to total resources available to cooperatives.
It has
been estimated that the average cooperative society has only 10 to 20 per cent
of its resources in equity capital. This may be the consequence of dependence
on donor aid, with little effort to promote sustainability. Coupled with
unsophisticated managerial skills, this has resulted in low repayment rates on
loans to members, estimated at 30 to 50 per cent in 1986.
(v)
Other credit institutions
Credit institutions set up since 1987 have served as a mechanism for
disbursement of revolving credit funds received from donors in the West Bank
and the Gaza Strip. These institutions have no other formal financial
- 40 -
intermediary role such as
cashing or investment of savings.
Four local
institutions have provided loans to industries and business firms since 1987;
i.
Arab Development and Credit Company (ADCC), founded in 1987, provides
loans for agricultural projects. With loan capital totalling $3 million
in 1991, repayment of 30 per cent of which was overdue by more than
90 days;
ii.
Cooperation for Development (CD), founded in 1987, provides loans for
agricultural and industrial projects.
Its loan capital estimated at
$2 million, the repayment of 8 per cent of which was overdue in 1991;
iii.
Economic Development Group (EDG), founded in 1988, provides loans for
both agricultural and industrial projects, with a loan capital of
$2 million, the repayment of 40 per cent of which was overdue in 1991;
and,
iv.
Technical Development Company (TDC) , founded in 1989, to provide loans
for industrial and agricultural projects. Whereas data are not available
on outstanding loans, its loan portfolio amounts to $3.2 million.
The impact of these institutions on economic development in the
territory has thus far been small. By late 1991, the amount of loans
extended totalled $6.8 million, 70/ most of which were relatively small
(betweeh $5,000-$60,000, though most averaged $10,000) and were provided to
small and medium-size enterprises. 71/ The interest rate applied ranged
from 4 to 4.5 per cent, except for CD which charged 8 per cent interest.
The primary source of funding for these credit institutions was the
European Community, which until 1991 provided 70 per cent of all liquid
assets of these institutions. The Welfare Association, a Palestinian
non-governmental organization based in Geneva, was the second most important
source of funds in terms of volume, providing initial start-up costs for most
of these institutions.
(vi)
Informal credit markets
Given the weakness of the formal financial system, it is not surprising
that a variety of informal financial intermediaries have emerged. The most
prominent of these are the "moneychangers", or dealers in foreign exchange in
the parallel market. Moneychangers have, in fact, operated in the West Bank
and the Gaza Strip before 1967 (when there were approximately 40), but their
numbers and the
of their activities have increased sharply since then.
As of the end of 1986, an estimated 200 moneychangers operated in the
West Bank, most of whom were not licensed by either Jordanian or Israeli
authorities.
In addition to currency exchange, moneychangers hold short-term deposits.
Operating on the margins of legality, they are entirely dependent on their
reputation and on the tolerance of the authorities.
Since these dealers
typically do not maintain written records, there are frequent disputes between
them and the fiscal authorities concerning their tax liability.
- 41
Although the moneychangers fulfil an important function, they do not and
cannot fill the need for financial intermediation in the territory.
The
current underdeveloped nature of financial intermediation means that the main
source of credit is family connections. This system has at least three
disadvantages: it is small and fragmented, thus leading to only a limited
degree of financial intermediation; it is ultimately dependent upon family
wealth, which often is a function of remittances; and, it reinforces
traditional business practices that impede successful economic development.
2.
Insurance services
Insurance services are limited in scope and comprehensiveness in both the
West Bank and the Gaza
Almost all of the insurance agents operating in
the territory work for Israeli firms, as only two Palestinian companies exist:
the Arab Insurance Establishment and the Jerusalem Insurance Agency.
Usually,
in addition to insurance services, these agents also handle travel and related
services.
There is a significant number of insurance agents, representing Israeli
brokers, operating in the West Bank and the Gaza Strip. Up until 1987, about
40 to 50 agencies were in operation. This is primarily owing to compulsory
automobile insurance; automobile insurance is reported to account for 80 to
85 per cent of all insurance premiums in the territory, 72/ which were
estimated at $27 million in 1986. 2I/ All those funds were held in Israel,
including those of the Palestinian companies, and are seldom invested in the
West Bank or Gaza Strip.
Insurance companies retain 82 per cent in liquid
assets, most of which are held either as cash in hand, cash in banks, or
deposits in foreign currencies. Their investment share in companies accounts
for only 0.03 per cent; extended loans and investments in security bonds
amount to 1 per cent of their assets.
The Arab Insurance Establishment, with mainly automobile rather than life
insurance portfolios, was established in the mid-1970s.
It is governed by
both Jordanian and Israeli law. As a result, it is required to maintain a
minimum of 40 per cent liquidity, but actually maintains a higher percentage.
In 1984, over 80 per cent of its assets were in the form of time deposits in
Israeli banks, with reinsurance secured in London.
The Arab Insurance Establishment has allocated part of its funds to local
investment projects by subscribing to major shareholding firms in the
West Bank, despite the fact that such investments were not lucrative even when
compared with time deposits held in branches of Israeli banks. A relatively
small part of its resources was allocated to lending for commercial and
construction purposes.
In 1984, almost 9 per cent of its $25 million in
assets was in the form of loans and discounted bills.
Despite the increase in insurance transactions in 1984, almost no change
was recorded in the size of the insurance services deficit in the balance of
payments by 1987. Whereas the total turnover in insurance-related payments to
and from the occupied Palestinian territory was around $10 million in the
mid-1970s (with a $3 to 4 million deficit), the value of transactions
surpassed $50 million in 1984. Insurance transactions receded thereafter,
ranging from $20 to $40 million annually. The deficit remained relatively low
rate of growth in exported
(at under $5 million), owing to the
- 42 -
insurance services (apparently, related to insurance coverage for imports
from/via Israel and Jordan) than in imported insurance services. Most of the
latter are devoted to vehicle insurance (with Israeli agencies), though a
proportion of such services is also required to cover merchandise exports
(CIF) , including those effected to/through Israel and the Arab markets.
3.
Real estate, construction and engineering design services
In most cities and towns, private individual investment is directed
towards housing, as well as commercial and industrial activities.
In many
residential buildings the ground level is assigned for shops or other forms of
commercial activities.
In recent years, an increasing number of individuals
and institutions have become involved in real estate development activities,
including the construction and sale of residential buildings, especially in
large cities such as Nablus, Ramallah and Gaza. These activities have been
carried out by individual investors, informal partnership or formal real
estate development companies.
Even though the concept of building and selling individual apartments
is a relatively new one in the west Bank and the Gaza Strip, it has been a
common activity in Jordan and other Arab countries for a period of time.
Palestinians in the occupied territory are becoming aware of it as one way of
contributing to the solution of housing problems, especially in the absence of
housing credit institutions.
Construction for commercial and industrial purposes, both by individual
investors or by the business establishments themselves, has increased in the
last few years. Several businesses, manufacturing companies and commercial
firms have been increasingly involved in construction. The establishment of
municipal industrial zones in the
cities has been accompanied by
increasing construction in these zones. Nablus, Ramallah and EI-Bireh are the
cities which have witnessed the largest activity in this field.
Construction services in the West Bank and the Gaza Strip are a
combination of traditional and modern practices. Traditionally, the "builder"
performed the functions of both the engineer and contractor as well as
participating in the physical labour. Today, the "builder" is more or less a
contractor, who is hired by the owner of the construction project, retaining
some of the traditional responsibilities, such as overseeing the
implementation of minimal technical and engineering standards. The scope of
engineering services provided usually depends on the project. In the building
of a private house, the engineer provides the blueprints, and mayor may not
be required to visit the site. The contractor, in many instances, takes on
the responsibilities of the engineer from the start of the project.
For
larger projects, such as factories, schools or hospitals, engineers are
required to be on site almost continuously.
A field survey conducted in 1985 221 concluded that of total
construction completed between 1967 and 1985, 56 per cent of its financing
originated from abroad. This comprised over 62 per cent from private
remittances, with the balance of external resources provided mainly by the
Jordanian-Palestinian Joint Committee. A significant proportion of financing
provided domestically was generated from employment in Israel. By 1985,
-
43
-
over 30 per cent of the employed labour force of the West Bank, and about
50 per cent in the Gaza Strip, were employed in Israel, almost all in the
construction and housing sector.
Financing is only one hurdle that Palestinians must overcome so as to
construct a building. A building licence must be obtained from the
authorities before construction may commence. As table 14 shows, not all
applications for building are approved by the authorities.
Employment in the construction industry increased significantly in both
the Gaza Strip and the West Bank between 1987 and 1990.
In 1989, 11 per cent
of employed Palestinians in the West Bank worked in construction - primarilJT
housing construction - as compared with 10.7 per cent employed in 1980. On
the other hand, there was a 73 per cent increase in Palestinians employed irl
this sector in the Gaza Strip rising from 7.3 per cent of employed persons in
1980 to 12.6 per cent in 1989.
There is an adequate supply of qualified engineers in the territory, as
table 15 shows, which has made it difficult to find employment for all.
This
is evident from the high rate of unemployment among qualified engineers,
estimated at around 28 per cent in 1990. 76/ The major impact of this
situation has been that many engineers have left the territory during the last
25 years in search of better jobs and better pay, mainly in the Gulf States.
However, the situation deteriorated starting with the intifada and culminating
in the 1990/1991 Middle East crisis, with many returning engineers finding no
work.
Most engineers are self-employed. A newly qualified engineer can
either secure a job with a local firm, which is difficult and pays only
about 150 Jordanian dinar (about $210), or open 'his/her own office. Many
opt to open their own offices (usually operating from their homes) rather
than work for others. Those who do work in others' firms usually do so for
one or two years at most, eventually opening their own offices as well.
While 10 per cent work with local firms, 90 per cent work from their own
offices.
In 1990, there were 170 engineering offices located in the different
cities of the West Bank. There are no reliable data available for the
Gaza Strip.
Engineers face a tight market for their services, as conditions of supply
and demand have led to high unemployment and low income levels. Demand for
engineering services, as has been shown, is determined by political stability,
policies and income levels. The continuing growth in supply of engineers,
on the other hand, does not correspond with the present demand situation.
It
is estimated that at present, local universities are graduating on average
65 engineers per year, in addition to those graduating from universities
abroad, levels that exceed the local economy's capacity efficiently to absorb
and allocate this important element of Palestinian manpower.
4.
Accounting, legal and other business services
Only partial data are available on some of these vital branches of
Palestinian producer services, whose development over time (in terms of
differentiation, scope, sophistication and trading) vividly reflects an
economy's overall progress. Their close relationship to the growth of
- 44 primary, and especially, secondary sectors renders their potential role
significant.
In the case of the Palestinian economy, however, such
interlinkages are weak (see chap. I). The growth of these branches has been
erratic and by most accounts the Palestinian business sector in the occupied
territory has been isolated from modern and efficiency-oriented modes of
operation and has consequently been unable to expand and interact dynamically
with other branches and sectors.
Accountancy services increased significantly after Israel introduced
value added tax and clamped down on income tax collection in the late 1970s.
A detailed system of taxes, duties and fees was enforced in the territory
before 1967, which may be broadly classified under direct (income tax,
property tax, land tax), and indirect (customs duties and excises, education
tax, fees and charges) taxes. The main task of accountants, as viewed by the
Palestinian taxpayer, is to minimize the tax bill and keep clear books with
the tax office. By 1990, there were 23 accounting offices certified (by
Israeli authorities) in the West Bank and the Gaza Strip. However, there are
some accountancy offices which operate with no licences. Furthermore, a
number of accountants are employed by
companies, totalling at least
1,500 in the West Bank and the Gaza Strip.
Other categories of business services, such as management conSUltancy,
product des
, marketing and advertising services, have not been available in
the territory. However, the Bir-Zeit University Consultation Technology Unit
provides some managerial and marketing services by the staff of the Economic
and Commerce Faculty.
In addition, a firm in Ramallah specializes in product
design, packaging and marketing, employing 10 specialists, but demand for such
services and its scope for expansion have remained limited since 1967.
The situation of legal professionals in the West Bank and the Gaza Strip
There are two groups of lawyers: one group
their salaries from the Lawyer's Union in Jordan, which has been on strike
since 1967 in protest against the imposition of Israeli military law. The
other group, many of whom entered the profession after 1967,
through
the exist
legal and judicial framework.
Those who continue to boycott the
legal system do so on the basis of refusal to recognize the authority of the
military over legal matters, the transfer of the appeals court from east
Jerusalem to Ramallah (when east Jerusalem was annexed by Israel in 1967) and
the application of Israeli law over east Jerusalem. Those who continue to
work have handled mainly security cases, defending political activists and
those accused of military action against Israeli forces and property.
Civil
court action requiring the services of lawyers is not significant as those
matters are often resolved out of court.
is somewhat complex.
Some 261 lawyers practised in the West Bank and 253 in the Gaza Strip
in 1990 (see table 16).
In the West Bank, about 40 per cent of the lawyers
ran their own firms, while about 50 per cent did so in the Gaza Strip. The
lawyers' role is largely limited to real estate, trade and business
transactions.
In addition, some 30 lawyers from the West Bank and the
Gaza Strip work in the Israeli military courts to defend Palestinian
detainees.
A final insight into these and preceding producer services is provided by
references to broadly comparable data for east Jerusalem in 1969, 1982 and
- 45 1986. These
some indication of the relevant trends in an important
component of Palestinian producer services during the occupation period. As
shown in table 17, between 1969 and 1982, the number of producer service
establishments in the central business district of east Jerusalem grew
three-fold, from 50 to 154. By 1982, there were 14 financial and insurance
establishments, 14 real estate and engineering offices, while accounting,
legal and other business services grew from 44 to 126 establishments. Three
branches witnessed different trends in the early 1980s, however, whereby
financial and engineering services continued to grow, albeit at a slower rate
than in the 1970s. This is consistent with the higher levels of financial
transactions in the 1980s (remittances, aid and merchandise trade revenues
with Jordan and Israel) and the related construction "boom" of the period.
However, other producer services appear to have declined significantly in t:he
same period, back to post-1967 levels. While this may reflect particular
conditions affecting east Jerusalem, it corresponds to the trends identified
in this study affecting non-service sectors in the 1980s.
c.
Social services
1.
Doctors, hospitals, dentists, pharmacists
According to the West Bank Medical Association, in 1990 there were some
1,234 doctors registered in the West Bank, most of whom were employed in
the 15 local hospitals (government and private), private clinics, or
non-governmental medical organizations (see table 16). 78/ In the
Gaza Strip, some 700 doctors were reported to be registered, half of whom were
employed by seven local government and private hospitals. 22/
The ratio of population to doctors in the West Bank showed a significant
improvement, from 1 / 203 persons per doctor in 1985 to only 891 in 1990. This
was mainly owing to the increase in the number of graduating doctors returning
from their studies abroad after 1985. 80/ In 1990, the Gaza Strip
registered a ratio of around 900 persons per doctor, especially owing to
u~WA/s extensive ~edical network in the Gaza Strip.
Whereas the
doctor/person ratio improved, the number of hospital beds per population
deteriorated. Only 15 hospitals were in operation in the West Bank in 1990
down from 25.
In 1990, the number of available beds was put at 1 / 320 beds in
the West Bank and at 933 in the Gaza Strip.
1
The services offered by the health care sector are primarily based on
curative medicine. With the exception of UNRWA clinics for children, there
are no programmes for preventive medicine in the West Bank or Gaza Strip. The
services provided by government hospitals are standard medical services; if
specialized care is needed, the patient is referred to Israeli hospitals.
Neither the operating budgets nor the technical levels of governmen.t hospital
allow them to provide better services. Private hospitals also face budget
constraints. Private hospitals are usually operated by non-profit
organizations both local (such as al-Makassed Hospital in Jerusalem and in
Gaza City) and international (such as St. John's in Jerusalem)
which rely on
international funding for major investments or expansion of services.
1
1
Table 16 shows that there were 276 dentists in the West Bank in 1990.
The number of dentists in the Gaza Strip was not available but according to
1
- 46 -
one estimate, there were at least 200. 81/ Dentists in the west Bank
operate out of some 50 clinics, mainly located in urban centres.
In 1990, 310 pharmacists worked in the West Bank in 150 commercial
pharmacies and 9 pharmaceutical manufacturers. Another 110 pharmacists worked
in 43 pharmacies and a variety of medical establishments in the Gaza Strip
during the same year.
In the West Bank, pharmacists adhere to the Pharmacists
Association which was established in 1952. The association is in charge of
granting exclusive licences.
2.
Education:
universities and higher education 82/
In the west Bank there are five accredited degree-granting institutions:
An-Najah University in Nablus, Bir-Zeit University, Bethlehem University, the
I:slamic College in Hebron, and Al-Quds University which is composed of four
separate colleges located in Jerusalem and surrounding towns.
Some
900 faculty members are employed, ranging from professors to instructors.
In
the Gaza Strip, the institutes of higher education are not as numerous. There
is one accredited university, the Islamic University, and three vocational
institutes operated by UNRWA. Table 18 lists the universities in the
territory with their corresponding enrolment and faculty size.
In 1987/88,
the number of full-time students in these institutions totalled 15,320. The
student body is composed of Palestinians from both the West Bank and the
Gaza Strip. Of the 11,137 graduates of local universities (most obtain a
B,~chelors degree) for the academic year 1988/89, 4,337 majored in literature,
789 in education, 2,227 in commerce, 1,430 in Islamic studies, 1,744 in
sciences, 360 in nursing and the remaining 250 in engineering.
In addition to universities, there are also 18 other academic
institutions with two-year programmes. Three of those are operated by UNRWA:
two are teacher training colleges located in Ramallah (one for women and one
for men), and the other is a technical college located in Qalandia. Another
three colleges which have been financed by the Israeli Civil Administration
are located in Tulkarem, Al-Arub, and Ramallah, and two privately run,
profit-oriented colleges (non-accredited) are located in Ramallah and Nablus.
Other educational institutions and colleges specialize in religious subjects
and other studies. The different Palestinian institutions of higher education
pool funding and other resources, working through a Council for Higher
Education.
3.
Welfare, religious and non-profit social services
In 1967, there were 89 charitable organizations in the West Bank,
registered in accordance with Jordanian law. The needs of a growing
population and the relatively poor level and quality of social services
provided by the government encouraged the establishment of non-profit and
welfare organizations throughout the occupied territory. By 1983, there were
166 such organizations active in the areas of rehabilitation, vocational
education, services for the handicapped, educational (especially preschool)
services, health and ambulance services and community services, to name only
the major fields.
The Israeli authorities have supervised the activities of charitable
c.rganizations and authorized the establishment of new ones. The contribution
- 47 -
of the Israeli Civil Administration to these organizations, some of which
provide essential services, is minimal.
In the mid-1980s, the total budget of
all those organizations, which was five-fold that of the Administration's
total welfare budget, was financed by contributions and granus from abroad.
While these organizations have been very active in serving disadvantaged
rural and refugee communities, they did so largely without the participation
of those they served. However, as of the mid-1980s, a network of Palestinian
"grass-roots" organizations acquired prominence, especially during the
intifada. Working outside the. Israeli authorities' structures, these
organizations became an important component of the Palestinian
non-governmental social services Sector.
4.
Government and related services
It has not been possible in this study to investigate in any depth the
structure and performance of the Israeli Government and related services in
the occupied territory (i.e. the Civil Administration and other Israeli
government bodies). However, four areas which have remained mainly within the
realm of Palestinian social services are briefly referred to here, namely
courts and judges, postal services, chambers of commerce and municipalities
(with chambers of commerce being more a distributive than a social service).
The local law in the West Bank is a combination of Ottoman, British and
Jordanian legislation, amended or superseded by Israeli military orders in
certain situations.
In the Gaza Strip, the combination is Ottoman, British
and Egyptian legislation. Since 1967, 27 Palestinian judges and prosecutors
serve four courts of appeal and nine district courts in the West Bank.
In the
Gaza Strip, there are four types of courts: municipal, juvenile, magistrate,
and district. The judges and public prosecutors are appointed by the military
authorities.
In both the West Bank and the Gaza Strip, these courts try
criminal and civil cases only.
Political and military cases are tri,ad in
Israeli military courts, where the judge and prosecutor are military officers.
Owing to lack of statistics, it is not possible to determine the number of
cases heard by the courts.
Postal services are provided through some 60 formal post offices and
200 informal postal agencies.
Formal post offices generally provide a wide
range of services including local and international postal services, rental of
post office boxes, postal bank and monetary transactions, telegraph and
telecommunications services. The services offered by informal postal agencies
are limited to the sale of stamps, mail collection and delivery of post, and
in some cases collecting fines and bills for certain utilities and
administrative departments.
The chambers of commerce in the West Bank were established prior to 1967.
Although many of their activities have been curtailed, they continue to
function. Major towns of the West Bank including east Jerusalem have their
own chambers of commerce. A Council of West Bank Chambers of Commerce has
been operating since 1967.
In Gaza city, the Chamber of Commerce, established
in 1954, is governed by Egyptian law. By 1967, all other major towns in the
Gaza Strip had established chambers of commerce.
- 48
since 1967, the role and functions of chambers of commerce have been
reduced significantly and are now almost confined to local administrative and
clerical tasks. West Bank chambers of commerce perform preliminary services
related to passport and identity card procurement procedures, as authorized by
the Government of Jordan. They also issue notarized legal documents for
citizens who wish to entrust others with the management of financial or
business affairs in Jordan.
In addition, the chambers are authorized by the
Government of Jordan to issue certificates of origin for Palestinian goods
destined for export to or through Jordan. Their authority in this respect has
been recently reaffirmed as a result of the decision by the European Community
to accept chambers of commerce as qualified bodies for issuing certificates of
origin and ensuring the necessary administrative arrangements for exports to
the Community.
Gaza Strip chambers of commerce perform similar functions, geared
primarily towards Egyptian regulations. They issue and renew refugee travel
documents and identity papers on behalf of the Egyptian authorities and are a
rE~cognized authority for the issuance of certificates of origin for
agricultural exports. However, the potential role of Gaza Strip chambers of
commerce is largely undermined by the Israeli authorities, who restrict their
activity and potential expansion. These chambers also face serious financial
difficulties as clerical fees are their only source of income.
The municipal status of the 25 West Bank towns does not necessarily
irtdicate a significant scale of operation. In addition to 25 municipalities,
a number of village councils exist in the larger villages of the West Bank.
Smaller villages organize themselves around committees made up of
rE~presentatives of the different clans in the village.
The activity of the
municipalities in the West Bank are governed by the Jordanian Law of
Municipalities. They act upon matters as varied as water and electricity
supply, the establishment of public markets, butcheries, schools and other
m\micipal services such as tourist information centres.
However, their tasks are restricted to providing services such as
collecting water bills, issuing building licences within the municipal
boundary, garbage collection, issuing licences to shop-owners, overseeing the
market for local produce and other minor matters. These municipalities employ
around 5,000 workers in the West Bank and 700 in the Gaza Strip. Their
average revenue from tax collection is around $5 million annually.
D.
Personal services
1.
Tourism-related services
The most prominent personal service activities in the Palestinian economy
revolve around the tourism sector and are reviewed below.
(al
Hotels
The hotel branch in the territory has been subjected to rapid changes
since the onset of the occupation. 84/ During the first three years, there
was a marked increase in the number of hotels in the West Bank (outside east
J,:rusalem), totalling 29 hotels in 1970. As tourism declined the number of
hotels operating also declined, reaching only 18 by 1987. The number of
- 49
beds/night dropped by 54 per cent, and total number of hotel guests dropped by
75 per cent between 1970 and 1987 (see table 19).
Overall occupancy rates
declined from 27 per cent to 13 per cent during the same
There are no
official Israeli data available on the performance of hotels in the West Bank
since the
, but local Palestinian sources have estimated the number of
hotels in
in the West Bank (excluding east Jerusalem) at
six hotels
Along with the hotels in east Jerusalem, the number of
hotels in the West Bank as a whole was 40 in 1990, as compared to 69 in 1970
and 59 in 1967.
In 1970, six hotels operated in the Gaza Strip. By 1990, the
number had dropped to two hotels, catering to journalists, United Nations
personnel and business travellers.
According to local experts, hotels account for around 25 per cent of
total touristic expenditures.
From a 1990 survey of 36 hotels, of a total of
40 in the West Bank (including east Jerusalem), aggregate investment was
estimated at around
5 million. The average investment amounted to
$12.9 million for a five-star hotel, $4.5 million for a four-star hotel,
$1.9 million for a three-star hotel, $0.5 million for a two star hotel, and
$0.4 million for a one-star hotel.
In 1990, 36 hotels employed 900 permanent
workers (over 90 per cent of whom were in east Jerusalem), in additi(~n to
147 seasonal workers. The distribution of the labour force per hotel
indicates that the average employment is 96 workers for a five-star hotel,
41 for a four-star hotel, and 8 for a three-star hotel.
As of Dece~~er 1987, overall performance of West Bank hotels worsened
owing to the impact of the Palestinian uprising. A field study by the Arab
Hotel Association (see also table 20) concluded that the occupancy rate in
east Jerusalem and Bethlehem was 24 per cent in the second half of 1989, down
10 percentage points from 1987. Subsequent developments, especially the
Middle East crisis of 1990/1991, led to further declines in the performance of
the hotel sector. The drop in occupancy rate was most pronounced for one and
two-star hotels. Only one east Jerusalem (five-star) hotel was able to
maintain 80 per cent occupancy through the crisis/ owing to its excellent
location, service and
(b)
Restaurants
The range of restaurants operating in the occupied Palestinian
varies between simple and
, on the one hand, to stylish and
on the other. Popular restaurants cater primarily to the low-income groups,
serving traditional local dishes, whereas expensive restaurants cater to
middle and upper income groups, as well as tourists.
The latter serve
traditional local dishes, in addition to European dishes.
Most restaurants are owner-operated with a few nonworkers.
The
total number of workers employed in restaurants in 1987 was estimated at
roughly 600 in the West Bank. The actual nu~ber of restaurants in the
territory at anyone time is difficult to determine, owing to their large
turnover rate, and to the fact that many do not
the necessary permits
from the local government and health officials so as to avoid paying income
and value added tax to the authorities. According to table 21, the number of
licensed establishments in 1987, totalled 80 restaurants.
- 50 -
Restaurants were among the service branches hit hardest during the
uprising, owing to the closure of local markets by noon, in compliance with
the partial commercial strike in force since 1987. This made it hard for
restaurants to serve the main lunch and dinner meals to their clients. After
months of trying to withstand the pressure, a
number of restaurants were
=orced to close down for lack of business. By
1990, it was estimated
that 35 restaurants in east Jerusalem had to close down. An equally
rate
of closure took
in Jericho and Ramallah.
The impact was mostly felt by
better quality restaurants, which relied on lunch and dinner meals. More of
the smaller popular restaurants, which serve breakfast and light meals,
managed to survive.
(c)
The West Bank and the Gaza Strip have suffered from a lack of
entertainment centres since 1967. In the West Bank, out of a total of
12 theatre
, only one theatre
by 1990. Located in east
~Jerusalem, the theatre was often closed by police order, as military orders
are not valid in east Jerusalem. This theatre, originally a cinema building,
is able to seat 300 viewers comfortably, and employs five workers.
It has
faced constant financial problems. No theatres or theatre companies operate
in the Gaza
Cinemas in the territory have decreased in number since the occupation
and particularly after the intifada. A total of 23 cinemas in the West Bank
and 7 in the Gaza Strip "Jere in operation in 1967. None of these cinemas
remained operational in the wake of intifada in 1987.
The most
places of entertainment are coffee shops.
These
establishments cater to males only, and provide a popular meeting
over a
cup of coffee, water pipe and a game of cards or dominoes. Almost every
village in the West Bank has at least one coffee shop, whereas there were many
more in towns and cities: between 10 and 15 coffee shops in small towns, and
up to 25 in the large tO~TIS such as Ramallah or Jenin. 85/ Coffee shops
are also
in the Gaza Strip, including its refugee camps, providing an
important form of entertainment. However, since the intifada, coffee shops
lost many of their clientele, owing to the business hours set by the intifada
leadership, forcing them to close
their afternoon peak hours.
and social clubs are another form of entertainment centres in both
the West Bank and the Gaza Strip. These establishments provide such
entertainment as billiards, table tennis, weight-lifting rooms, other sports
activities and light refreshments
They are run by
groups or
private individuals. Membership fees are collected, but non-members are
usually allowed entry and use of facilities for a fee.
These establishments
are basically non-profit and tend to close down when demand falls.
To
operate, they require a licence from the authorities, which in turn can close
i:hem down by military order for political or "security" reasons.
:2 •
The contribution of
and other personal services to the economy of
the West Bank and the Gaza
is difficult to quant
owing to the
I~xistence of a large "informal economy" comprising activities which straddle
- 51 -
different types of services branches, coupled with the large part of the
workforce which relies on providing labour services (including domestic,
and
services) to Israel as well as within the domestic
economy. There is also a lack of published statistics and studies on the
subject. The significance of labour and "multi-sectoral" providers of
professional services in the economy has increased since 1967. This is mainly
due to the reallocation of productive activity from agriculture to employment
in services and in Israel as well as the conse~~ent increased monetization of
economic activity that ensued.
Changing needs in the territory expanded
demand for existing services such as automobile mechanics, and developed
demand for new services such as computer maintena~ce, beauty
, and
domestic (home) services, thus increasing the significance of the services
sector in the economy.
At present, there are at least 1,100 licensed automobile
shops in
the West Bank.
In Nablus, 110 automobile repair shops operate with a licence,
but 40 other
(or 26 per cent of the total) operate without one. 86/
In Bethlehem only 46 per cent (41 shops) of the automobile
shops are
licensed. This does not include freelance automobile mechanics operating from
their O~TI homes.
Palestinian
services are a notable element of the export of
Palestinian services to Israel.
In addition to
services, the "other
services" item of the current account in the balance of payment includes items
such as financial services, trade-related services including agents' fees,
(Israeliied) labour services, including management, and various
government services provided from outside the territory which are charged
to Palestinian residents. Despite the continuing reliance on
services, the balance on services in the current account
in
after 1967,
as a result of
labour-service exports (to work especially in Israel's productive or service
bra::1ches). As has been noted, the "other services" item, "/hich consists
mainly of payments for Palestinian labour exports, is the only significant
category, and is the single most important source of credit to the
under the current account. Those receipts are erratic, underlining
the problems associated with the present degree of dependence on external
demand for Palestinian labour.
In a similar vein, labour wages from subcontracting and repair services
are classified under the services item of the current account but are not
One indicator of their contribution can be drawn
accounted for
from the difference between total service exports to Israel and gross factor
income (pre-tax) paid by Israel to Palestinian
workers. This
difference appears to cover services such as transport, travel, subcontracting
and other
According to Israeli data ~or 1980 1984, factor income
payments to Palestinians (which exclude wages paid in the occupied Palestinian
for subcontracting) were
to an average of 94 per cent of
total pa}~ents for Palestinian service exports, and the rest covers payments
for labour subcontracting and other services,
to an a::1nual average
of $22 million during the 1980 1984 period. While a portion of this covers
pay~ents for non-labour services provided
the territory (including travel
~nd tourism), payments from Israel for these items are considered relatively
small.
- 52 -
The exact productive role of Palestinian subcontracting activities is
difficult to ascertain and information on it is partial, as is the case of the
textile sector.
In 1978, some 343 licensed Palestinian sewing and knitting
workshops were commissioned to complete primarily pre cut or partially
produced garments for Israeli producers.
In 1986, the number of such
workshops had increased to 465 although this number may be underestimated by
20 per cent as some workshops were not registered.
In addition, many operated
from their homes.
The growth of personal services establishments in east Jerusalem during
the period 1969 to 1982 is depicted in table 17. This branch of services was
stagnant through the 1980s and appears to have actually declined subsequently.
While the fall in the number of personal services establishments may not have
been as precipitous as indicated in the table, the general crisis faced by the
Palestinian tourism sector in the 1980s and the growing decentralization of
many other personal (and repair) services away from east Jerusalem into the
rest of the west Bank during the 1980s could well explain this declining
trend.
- 53 -
Chapter III
CONCLUSIONS
Within the context of an overall weak development of the Palestinian
economy under occupation, this study has highlighted the pattern and trend in
tee growth of the services sector which has been relatively significant. The
process of growth, however, does not reflect the classical pattern observed in
~any developing economies that have moved from one phase to another in the
process of development. Growth of income in most such cases was largely
generated internally, with dynamic linkages to primary and secondary sectors.
In the occupied territory, however, it had been induced by external factors,
~rimarily through demand for Palestinian labour in Israel and the Gulf States.
Since 1967, the economy of the occupied Palestinian territory had
functioned mainly within parameters set by occupation policies and practices.
The consequences for the economy of ~he West Bank and the Gaza Strip were
intensification of structural fragmentation (i.e. the weakening of sectoral
articulation) amidst primary sector stagnation.
The Palestinian services
sector had not developed along a similar path to that of other economies
undergoing industrialization, reflecting growth in demand for intermediate
services from elsewhere in the economy and in the welfare function of the
State. Growth in Palestinian services sectors appeared to have taken place as
an alternative to growth in the industrial sector, rather than one of its
consequences, corollaries or even causes.
The contribution of the primary and secondary sectors to the Palestinian
economy and to its process of development had been minimal, as was their
contribution to growth of services. The development of the former sectors had
been stifled by the restrictive regulatory and policy framework and unequal
competition with the more developed Israeli economy.
This in turn had
constrained the development of certain (especially producer) services, while
promoting the growth of others (wholesale and retail-trade services).
The
Palestinian economy did not witness the inducement to increased demand for
services usually generated by an economy's shift from emphasis on the primary
to secondary sectors (manufacturing).
Indeed, the growth of the construction
sector absorbed much of the human and financial resources which were thus
reallocated.
The growth that did occur in services was not part of a comprehensive
development process.
Instead, what may be termed as "growth poles" emerged in
certain services branches which were stimulated by externally generated
demand either in the form of international consumers (e.g. tourism) or
through the availability of external income and imports, thus increased
personal consumption (e.g. distributive services).
This did not have a
demonstrative or other effect elsewhere in the economy, owing to the weak
market, and to institutional and physical inter-sectoral linkages in the
Palestinian economy.
The specific situation of the occupied territory
(e.g. its restrictive regulatory and security environment) was an important
factor which discouraged greater investment, and hence growth, in services.
Indeed, had the policy and regulatory climate permitted, Palestinian expertise
in providing relatively high-quality producer and distributive services
-
54 -
elsewhere in the region could have been an important element of overall
investment in domestic services activities.
The potentially dynamic role of
many Palestinian services branches has yet to be thoroughly explored.
As noted, though growth in Palestinian services was largely demand
induced, this was mainly via final consumer demand, thus promoting trade and
distributive services. Another salient feature of growth in Palestinian
services was its concentration at the lower end of the skill and technological
spectrum, with associated lower productivity (as compared to the high
productivity gains often cited in cases of development of certain service
branches elsewhere).
Furthermore, the external linkages of much of the demand
for services rendered these branches especially vulnerable to the erratic and
turbulent trends in output elsewhere in the economy and in consumer demand for
services.
This was most vividly exhibited in the contraction in tourism
activity, the cuts in public services and the significant consumer compression
(affecting especially distributive services) over most of the 1988-1991
period.
However, given the "blurring" of frontiers which is often characteristic
of the links between services and some other sectors, the real potential of
Palestinian services is not always evident. The very nature of most services
provided in (and by) the Palestinian economy implies mobility (geographically,
sectorally and occupationally), operation in the frame of a large informal,
and unregistered, economy, and relatively rudimentary technological levels.
Thus, the true significance of the Palestinian "service economy" may be
greater than is statistically apparent, though its growth potential is
constrained by prevailing low levels of skills, technological sophistication
and capital investment. The ensuing structure (including capital, human and
institutional assets) of the Palestinian services sector thus leaves much to
be desired in terms of specialization, efficiency and economic growth
potential.
Although variations in the relative importance and growth of different
services exist within and between the modern "service economies", these have
tended to be marginal.
For the Palestinian economy, however, strong services
growth has involved a contribution to GDP and employment which was
concentrated in distributive services branches, growing along with personal
income levels until the mid-1980s.
The other services branches within the
Palestinian economy had experienced either marginal or no growth, reflecting a
meagre contribution to GDP and employment.
Since 1967, the contribution to
GDP of the public and community services sector had decreased while its share
of employment had increased only marginally.
Producer services branches had contracted, primarily owing to
restrictions imposed by the authorities and the absence of conditions
conducive to industrial growth.
Prevailing restrictions left the economy with
no effective financial institutions to mobilize and channel funds to
productive investment in secondary or tertiary sectors. To the extent
possible, many Palestinian producer services were provided in-house
(e.g. accountancy, advertising, computing, etc.) by firms active in
manufacturing, construction or other productive sectors. Otherwise, many
requisite producer or lucrative distribu~ive services (e.g. financial,
insurance, international transport and communications) were obtained from
international suppliers (in Israel, Jordan or Europe) . Thus, the incentive to
-
55 -
expand or improve domestic producer services branches was reduced,
In a
sense, the inefficient (and generally small) producer services branch
constituted an additional drag on Palestinian development prospects.
The expansion of distributive services within the Palestinian economy and
the stagnation of the primary and secondary sectors were reflected in, and
related to, the open international trade structure of the economy primarily
with one market (Israel). Since the onset of occupation in 1967, the
Palestinian economy had been an import surplus economy, and merchandise
imports account for three quarters of total Palestinian imports. The
important factor which had allowed the Palestinian economy to sustain a large
import surplus over the years, and which at the same time had significantly
contributed to growth in per capita disposable income was wage employment
outside the territory, mainly in Israel.
Within the current account, the gap between the merchandise deficit and
the services surplus had been large in most years (especially since the
mid-1980s), with the surplus in services only partially compensating for the
steep rise in merchandise imports.
The export of Palestinian labour services
had emerged as the prime generator of external resources in the current
account, ensuring an increasing annual surplus.
Since then, and particularly
following the 1990/1991 crisis in the Middle East, the fall in revenues from
this source had negative conse~uences for the current account position
especially in the light of continued growth in the merchandise deficit.
While
the export of labour services had its positive income effect (which was also
partially transferred to distributive services branches), this greatly
overshadowed the gains from export of non-factor services upon which the
Palestinian economy could have relied (especially that of some personal and
producer services) .
In order better to guide and promote the development of the existing
potentials of Palestinian services, a nurr~er of measures appear pertinent and
their implementation increasingly feasible.
First, policy-makers,
entrepreneurs and investors in the occupied territory need to develop a better
appreciation of the role of services in domestic economic activity and
international transactions. This is essential for the formulation of a
coherent services sector policy geared to improving the contribution of
services to growth and development and to meeting various, and sometimes
conflicting, goals towards which the development of services may contribute;
these include economic growth, employment, foreign exchange generation,
protection of the consumer, improvement of the standards of living,
safeguarding political gains and conservation of cultural values.
A Palestinian services policy needs to be elaborated, which would,
help increase opportunities for business entry, define priorities
for investment, assure a smooth and secure environment for services activity,
attract international services providers in the framework of a national
services pol
and enhance direct and indirect links between services and
other economic and social sectors. The Palestinian economy can offer a range
of existing and future services and the investment in this needs to be
carefully studied in the light of domestic and international market
considerations. There are a number of choices facing policy-makers and
entrepreneurs alike; a balanced and innovative assessment of the potentials of
each option will help guide investment decisions and optimize their impact,
-
56 -
An important prerequisite in this regard is the availability of
appropriate information and data that would enable the competent authorities
to formulate effective policies for optimizing the contribution of the
services sector to both the domestic and international markets. As has been
noted throughout this study, the services sector is among those which have
been the least-documented and surveyed by official or other sources,
Comprehensive and accurate statistical information needs to be collected on
services (covering output, investment, employment, etc.) and analysed with the
aim of defining the structure and potentials of the sector better and planning
its optimal development.
There is also a need to generate greater awareness of the significance of
services for the region as a whole and to stimulate research on common issues
at the subregional and regional levels. Given the overall role of information
and communication in the modern service economy - these being key services
affecting performance and competitiveness of other sectors - Palestinian
institutions should upgrade information and communication systems through the
development of joint databases and the pooling and efficient dissemination of
technical and other information needed to enhance efficiency and productivity.
The policy formulation process will lay the substantive basis and
determine the orientation of the legal framework covering the key areas
affecting services branches. The design of a comprehensive set of laws and
regulations is needed in most areas of the economy, including in the services
sector, in particular for: business licensing and taxation; quality control,
safety and other standards; domestic and foreign investment; international
services transactions; and environmental protection. The establishment of a
clear, modern and liberal regulatory framework for domestic and international
services activity will help to define relationships among the concerned
branches and institutions and provide the necessary frame of reference for the
day-to-day operation of the sectorls institutions and personnel on the
national regional and local levels.
I
Such a framework will also help to determine the public and private
institutional needs of the services sector on sectoral and branch levels. It
remains to be seen to what extent and for what duration, Palestinian public
agencies will be required to help launch or promote Palestinian services.
This issue might be especially important with regard to those services which
are also traded internationally (such as transport finance l engineering and
tourism) and those in which Palestinian suppliers have less experience.
In
any case l given the existing low level of public ownefship of services firms l
government involvement in direct investment or operation of services
enterprises appears unadvisable. This is so notwithstanding the need for
wide-scale upgrading of public utilities and communications networks and
ancillary infrastructure upon which efficient services depend.
I
I
I
Palestinian distributive and personal services branches will most likely
remain predominant in the sector for some time, at least until the
manufacturing sector begins to show signs of reversing its many years of
stagnation.
In the meantime further well-targeted investments in crucial
links of the existing active services branches (especially transport, trade
and tourism) could help to streamline and enhance their performance.
In the
longer term, increased efficiency in the economy and in the services sector is
closely related to the availability of producer services of adequate quality.
I
- 57 -
This includes important services which are currently weak or lacking in the
territory such as: quality control and standardization; labelling, packaging
and promotion; storage and handling; management services; computerization;
equipment maintenance; and legal services.
The development of these new services in the Palestinian economy is
prerequisite to the emergence of a modern services sector and for the healthy
functioning of other sectors. Inadequacy in those services, or in the
regulatory framework governing them, can create serious bottlenecks in the
production and distribution process.
For example, public sector support
schemes could be considered to
the lead towards the optimum design of
small- and medium-sized businesses services, appropriate to the particular
needs generated by the Palestinian situation.
In other words, there is no
standard format for organizational
The key issue here is the
coordination of different types of support services for different functions
and branches.
Technical assistance and training needs are apparent in all sectors of
the economy.
Indeed, the different services already in place in the territory
(especially distributive and personal) would benefit not only from the
investment in improved equipment, but also from facilities, infrastructure and
institutional arrangements. These are all areas in which each services branch
has specific needs and potential for improvement.
In addition, since a
sizeable proportion of the technologies used in modern services are embodied
in
, the development of indigenous modern services is conditional on the
development of appropriate human skills in a wide range of occupations,
scientific and technical personnel, as well as economists,
statisticians, accountants, lawyers, managers, administrators and other
science/skill intensive occupations.
In the long run, the development of a
Palestinian services sector will
policies aimed at upgrading
domestic technical and educational infrastructure and programmes
across the-board.
58 -
1./
Among these have been: S. Kuznets, "Quantitative aspects of the
economic growth of nations, II: industrial distribution of national product
and labour force",
supplement to
Vol. V, No.4, (July 1957); C. Clark, The conditions of economic progress,
(London, 1957)
third edition; J.I. Gershuny, and I.D. Miles, The new service
economy:
the transformation of employment in industrial societies, (New York,
Praeger publishers, 1983); J. Singlemann, "The sectoral transformation of the
labour force in seven industrialized countries, 1920 1970", American Journal
of Sociology, Vol. 83, No.3, (1978), p. 1224; J. Singlemann, From agriculture
to services, (Beverly Hills, Sage, 1979).
I
~/
S. Kuznets, ibid.
~/
For a more detailed discussion see: G. Ofer, The service industries
in a developing economy:
Israel as a case study, (New York, Praeger
publishers, 1967), pp. 16-17.
~/
See UNCTAD and the World Bank, Liberalizing international
transactions in services - a handbook (United Nations, New York and
Geneva), 1994, p. 1.
~/
V.R. Fuchs, The service economy,
Research, New York, 1968).
&/
(National Bureau of Economic
See J.I. Gershuny and I.D. Miles, op. cit., pp. 11 12.
2/
See H.C.
and J. Singlemann, "The Transformation of the
US Labour Force:
the interaction of industry and occupation", Politics and
====~~, 8(7-4), 481 509.
~/
See UNCTAD and World Bank, op. cit., p. 3.
2/
J.I. Gershunyand I.D. Miles, op. cit.
Ibid., pp. 26 29.
One major
in analysing the services sector in the occupied
and its contribution to GDP and employment is the non-availability
of disaggregated data. The only available time series data are provided by
the Israeli authorities, through the Central Bureau of Statistics (CBS). This
data suffers a number of shortcomings, as noted by one Israeli researcher who
commented that:
"the official reporting of GDP, GNP, exports and imports and
balance of payments of the territories is, however, inaccurate at best and
misleading at worst".
(See M. Benvenisti, 1986 Report: Demographic,
economic, legal, social and political developments in the West Bank,
(Jerusalem, The West Bank Data Project, 1986), p. 5.) Thus, when dealing with
the data provided by the CBS, these problems should be kept in mind. While an
attempt has been made to collect data specifically for this study, constraints
- 59 -
by time, limited resources and the local situation, render the data
far from comprehensive.
J.S. Migdal (ed) , Palestinian society and politics,
Princeton University Press, 1980), p. 145.
Z. Abu-Amr "The Gaza Economy", in G.T. Abed,
economy, studies in development under prolonged occupation,
Routledge, 1988), p. 101.
Jamil Hilal,
during the years 1948-1974,
(Princeton,
(London,
(Beirut, PLO, 1974).
Ibid.
~/
E.H. Tuma and H. Darin-Drabkin,
(London, Croom Helm Ltd., 1978), p. 67.
UNCTAD, Palestinian external trade under Israeli occupation,
(New York, UNCTAD/RDP/SEU/1, 1989), p. 50.
18/ "A study of the human resources for the regular organizations".
Jordanian Committee for Reconstruction, Jordan, 1965.
The
19/ s. Roy, The Gaza Strip survey, (Jerusalem, the West Bank Data
Base Project, 1986), p. 5 and 22 "Selected statistical series on balance of
payments, foreign trade, population, labour force and employment of the
occupied Palestinian territory (West Bank and Gaza Strip), 1968-1987",
(UNCTAD/DSD/SEU/1) .
20/
S. Roy, ibid. , p. 19.
21/
s. ROY, ibid.
22/
Ibid. , p. 67.
2,2/
Z. Abu-Amr, op. cit. , p. 109.
24/ This percentage includes that part of the labour force working in
Israel.
If only those working in the Gaza Strip itself were considered, the
percentage in 1987 would have been almost 10 per cent.
25/
Statistics, 1970), p. 626.
26/
(Jerusalem, Central Bureau of
Z. Abu-Amr, op. cit., pp. 102 103.
- 60 Agriculture is the only sector showing a
ficant growth in
productivity, but this has been mainly in areas where irrigation was possible
and only when capital had been invested consistently. Dry farming agriculture
has shown only marginal increases in productivity, mainly owing to the
withdrawal of marginal plots from cultivation.
For a more detailed discourse, see, Y.A. Sayigh, "The Palestinian
economy under occupation: dependency and pauperization", Journal of Palestine
~~~=, Vol. XV, No.4 (Summer, 1986), pp. 46 67.
J.I. Gershunyand I.D. Miles, op. cit., p. 30.
lQ/ Though in some cases, like the United States, distributive services
employed 26 per cent of the labour force in 1989 - higher than any of the
other sectors.
31/
J.I. Gershuny and I.D. Miles, op. cit., pp. 30-31.
32/ R.G. Lipsey, et al., Economics,
Publishers, 1990), p. 515.
33/
(New York, Harper & Row
ESCWA, "Trade in Services" (E/ESCWA/DPD/87/26), p. 29.
34/ Between 1976 and 1985, the number of public sector employees grew by
1,000 from 10,607 to 11,614, growing on average by less than 1 per cent per
year. M. Benvenisti, op. cit., p. 15.
35/
UNCTAD secretariat calculations.
36/
See TD/B/40(2}/8.
12/
UNCTAD, op. cit.,
~/
G. Ofer, op. cit., p. 40.
39/
UNCTAD, Trade and Development Report, Geneva, UNCTAD,
(UNCTAD/DSD/SEU/1).
(1988), p. 193.
40/ This is consistent with the low Leontiff coefficients and minimal
linkages historically exhibited by services (as propounded in A.O. Hirschmann,
The strategy of economic development, (New Haven 1958), chapter 9) .
42/
Report of the Director General, annexes, ILO 78th Session, 1991.
42/ The Israeli CBS has grouped in one sector those employed in the
four services
along with those employed in water and electricity
works.
- 61 -
43/ Detailed in CBS data: as (a) trade restraints and levels;
(b) transport storage and communication; and (c) other sectors covering
financial, business and most personal services as well as electricity and
wat.er.
44/ Branch-level data, as available, are referred to in the relevant
sections of Chapter III.
45/ UNCTAD, op. cit., "Selected national accounts series of the occupied
Palestinian territory, 1968-1987" (UNCTAD/RDP/SEU/6).
46/
Ibid.
47/
See UNCTAD, op. cit.,
(UNCTAD/RDP/SEU/1), paras. 129-142.
~/
J. Kuttab and R. Shehadeh, Civilian administration in the occupied
West Bank: analysis of Israeli military government order no. 947,
(Ramallah, West Bank, Law in the Service of Man, 1982), p. 10.
49/ See UNCTAD, "The Palestinian financial sector under Israeli
occupation" (UNCTAD/ST/SEU/3/Rev.1).
2.Q/
See M. Benvenisti, op. cit.,
(1986), pp. 18-19.
21/ Statistical abstract of Israel, (Israel, Central Bureau of
Statistics, 1992) table XXVII/12, p. 742.
52/ Economic Commission for Western Asia, Economic integration in
Western Asia, (London, Frances Pinter, 1985), Alli.ex I.
22/ The ownership of a taxi is not only the ownership of the vehicle, but
also the licence that allows it to operate on a specific route. Usually,
licences cost twice the price of the vehicle.
54/ Bir-Zeit University, General transportation in the West Bank and
Gaza Strip/problems and solutions, unpublished report, 1991.
~/
According to the Managing Director of the Orient-Kawasmeh Tours
Company of east Jerusalem; also see "The tourism sector and related services
in the Palestinian territory under Israeli occupation" (UNCTAD/RDP/SEU/7).
56/
UNCTAD, op. cit.,
(UNCTADjDSD/SEU/1).
57/
UNCTAD, op. cit.,
(UNCTAD/RDP/SEU/1), p. 194.
~/
Interviews with village inhabitants and pest office officials In the
villages.
59/
According to the Chairman of the Arab Journalist Association.
62
60/ This section is
from a study by an UNCTAD consultant,
M. EI-Jafari, "Main features of domestic and external merchandise trade in the
West Bank and Gaza Strip", (UNCTAD/ECDC/SEU/S).
61/ See Hyman et al., Jerusalem in transition (Jerusalem Institute for
Israel Studies, 1985).
62/ See A. Alawneh and Q. Abu-Harb, Economic conditions in Arab Jerusalem
(Arab Studies Society, Jerusalem, 1988).
63/ For a detailed examination of this subject, reference is made to
UNCTAD, "The Palestinian financial sector under Israeli occupation",
(UNCTAD/ST/SEU/3/Rev.1) .
64/
1991} .
H. Jabr, The banking sector,
prepared for UNDP, Jerusalem,
Bank of Palestine, Annual report of the board of directors, Gaza,
1991.
Ibid.
Ibid. and UNCTAD, op. cit.,
UNCTAD,
(UNCTAD/RDP/SEU/1).
"The Palestinian financial sector under Israeli occupation",
.
(L~CTAD/ST/SEU/3/Rev.1)
Ibid.
70/
Peter Gubser,
(unpublished report, Jerusalem, 1992).
71/
Field interviews.
72/
UNCTAD, op. cit.,
21/
Ibid., p. 48.
(UNCTAD/RDP/SEU/1), p. 48.
For an in-depth examination of the Palestinian construction sector,
see the study by an UNCTAD consultant, R. AbdulHadi, "Construction and housing
in the West Bank and Gaza Strip" (UNCTAD/ECDC/SEU/4).
12/ "Palestine Studies Projects",
Ramallah, 1986).
(Centre for
2£/ Interview with secretary of the West Bank
Beit-Hanina, 1990.
and Planning,
Union,
-
63 -
This section only covers salient aspects of the Palestinian health
care services sector, which is the subject of an in-depth study by an UNCTAD
consultant, R. Giacaman, "Health conditions and services in the West Bank and
Gaza
" (u~CTAD/ECDC/SEU/3).
78/
Interviews with officials of the West Bank Medical Association, 1990.
Ibid.
~/
Ibid.
81/
Medical Relief committees sources.
82/ This section does not refer to pre university education services
which are covered in-depth in a separate study by an UNCTAD consultant,
K. Shakshir Sabri, "Education in the West Bank and Gaza Strip" (forthcoming).
~/
This section is based on information in H. Salman, "Palestinian women
and economic and social development in the West Bank and Gaza
(UNCTAD/DSD/SEU/MISC.4) .
If
84/
See
u~CTAD,
op. cit.,
(UNCTAD/RDP/SEU/7).
85/ According to estimates provided by the Trade Union of Restaurant and
Hotel Workers, Jerusalem, 1990.
~/
Interview with the Director of the Nablus Chamber of Commerce, 1990.
Nablus, West Bank.
87/
UNCTAD, op. cit.,
(u~CTAD/RDP/SEU/1),
p. 57.
-
64 -
TABLES
Table 1.
J:.
Extractive
(1)
(2)
J::I.
Browning-Singlemann sectoral classification
Agriculture, fishing and forestry
Mining
Transformative
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
Construction
Food
Textile
Metal
Machinery
Chemical
Miscellaneous manufacturing
Utilities
:III. Distributive services
(11)
(12)
(13)
(14)
:IV.
Producer services
(15)
(16)
(17)
(18)
(19)
(20)
(21)
V.
Transportation and storage
Communication
Wholesale trade
Retail trade (excluding eating and drinking places)
Banking, credit, and other financial services
Insurance
Real estate
Engineering and architectural services
Accounting and book-keeping
Miscellaneous business services
Legal services
Social services
(22)
(23)
(24)
(25)
(26)
(27)
(28)
(29)
Medical and health services
Hospitals
Education
Welfare and religious services
Non-profit organizations
Postal services
Government
Miscellaneous professional and social services
65
Table 1.
VI.
(continued)
Personal services
(3D)
(31)
(32)
(33)
(34)
(35)
(36)
(37)
Domestic services
Hotels and lodging places
Eating and drinking places
Repair services
Laundry and dry cleaning
Barber and beauty shops
Entertainment and recreational services
Miscellaneous personal services
Source: Harley L. Browning and Joachim Singlemann, The emergence of a
service society: demographic and sociological aspects of the sectoral
transformation of the labour force in the U.S.A, (Springfield, VA, National
Technical Service, 1975).
Table 2.
Occupied territory:
Sectoral distribution of gross domestic product
selected years, 1968 1987
---
Year
Agriculture,
forestry,
and
fishery
Industry
Construction
and public
works
Public and
community
services,
electricity,
and water
Transport,
trade,
other
services,
and errors
Gross
domestic
product
(at factor
cost)
million $
Percentage
1968
34.2
7.3
3.0
19.2
36.3
133.7
1972
35.6
7.7
9.0
15.1
32.6
276.2
1975
29.6
8.6
16.1
15.6
30.2
543.2
1980
32.9
7.6
15.8
12.9
30.7
1 044.0
1981
29.5
7.3
18.1
16.1
29.0
945.0
1982
26.3
7.4
18.5
15.8
31.9
1 002.1
1983
23.8
7.7
18.0
17.5
32.9
1 047.1
1984
18.6
7.8
17.7
20.7
35.1
988.8
1985
19.8
8.0
17.2
17.3
37.6
949.7
1986
29.6
8.2
16.1
11. 7
34 4
1 536.7
1987
22.6
9.2
17.9
12.6
37.6
1 687.4
---
---
Source:
"National accounts series of the occupied Palestinian territory (West Bank
and the Gaza Strip) I 1968 1987" I (UNCTAD/RDP/SEU/6).
I
I
cr.
cr.
Table 3.
Occupied
empLoyed persons
(thousands)
sector, 1968 1988
By sectors
Year
Total
employed Agriculture
persons
Industry
Construction
Community
and social
services
Trade,
restaurants,
and hotels
Transport,
storage, and
communication
Other
sectors
!!!
1968
127.4
43 7
19.7
14.9
15.5
18.8
7.4
7.7
1969
162.8
66.7
21.2
18.2
18.7
22.4
7.9
7.6
1970
173.3
64.2
23.4
24.1
23.6
22.3
8.2
7.5
1971
176.5
60.1
24.7
25.7
25.2
23.6
8.9
8.4
1972
188.8
57.9
28.1
34.4
26.2
23.2
9.9
9.1
1973
194.5
53.4
31.2
40.1
25.9
23.9
10.3
9.3
1974
209.8
60.7
31.8
44.7
26.7
25.2
11. 0
9.7
1975
205.2
53.7
32.3
46.1
27.2
25.9
11.3
8.7
1976
205.8
54.0
33.1
44.1
27.9
27.2
11.1
8.4
1977
204.5
53.6
33.6
41.1
28.0
27.8
11.1
9.3
1978
211.9
54.2
37.0
44.5
27.9
27.3
11. 0
10.0
1979
212.4
49.8
40.1
48.2
26.7
26.7
10.9
10.0
1980
21S.7
SO.4
38.6
49.2
28.4
28.5
11. 3
9.3
1981
215.9
46.5
36.2
53.7
29.6
28.3
12.0
9.6
1982
222.9
49.9
36.2
56.1
30.7
28.0
11.5
10.5
1983
232.5
48.7
39.2
58.8
30.9
30.4
12.S
12.0
1984
241. 3
50.1
40.8
59.4
32.5
33.1
13 .0
12.3
1985
241 7
51.1
40.S
59.2
31. 9
33.7
12.1
13 .2
0'\
...J
By sectors
Year
Total
employed Agriculture
persons
Industry
Construction
Community
and social
services
Trade,
restaurants,
and hotels
Transport,
storage, and
communication
Other
sectors
260.8
56.5
43.7
64.3
33.1
36.5
12.8
13 .9
1987
277.8
54.3
48.2
68.2
35.1
40.2
15.4
16.0
1988
281.3
71.2
32.1
38.5
15.6
63.6
---
44.4
----
---
I
!!/
1986
--
I
15.9
-'-----
Sources: UNCTAD, "Selected statistical series on the balance of payments, foreign trade,
population, labour force and employment of the occupied Palestinian territory (West Bank and the
Gaza Strip}", 1968-1987 UNCTAD/DSD/SEU/1), 1993; and CBS, Statistical abstract of Israel,
(Jerusalem, 1990).
Notes:
Data excludes east Jerusalem.
Includes:
electricity and wateri financial, business, and personal services.
0\
(Xl
Table 4.
West Bank:
employed persons
(thousands)
sector, 1968-1988
""--------',
By sectors
Year
Total
employed Agriculture
persons
Industry
Construction
Community
and
social
services
Trade,
restaurants,
and hotels
Transport,
storage, and
communication
Other
sectors
~I
-
1968
83.5
32.4
12.5
10.6
9.1
10.6
3.9
4.4
1969
109.9
49.2
14.6
13 .1
11.3
12.9
4.1
4.7
1970
114.6
45.0
16.5
16.8
14.6
12.8
4.7
4.2
1971
116.8
39.9
17.6
20.2
15.7
13.9
4.7
4.8
1972
125.2
38.5
19.7
26.3
15.8
14.2
5.4
5.3
1973
126.4
33.4
22.4
28.6
15.7
14.5
5.4
6.1
1974
136.9
40.5
22.3
30.6
16.7
15.4
5.6
5.8
1975
132.3
36.3
22.0
30.0
17.6
15.7
6.0
4.9
1976
129.7
35.8
21.5
2'7.6
17.3
16.8
6.2
4.5
1977
127.3
35.4
22.0
25.1
16.7
17.3
5.8
5.0
1978
131. 5
36.7
23.1
27.3
17.0
16.4
5.5
5.5
1979
132.8
33.4
24.3
29.9
17.1
16.7
5.9
5.5
1980
134.8
35.3
22.8
30.5
17.9
17.2
6.0
5.1
1981
133.4
32.2
21.9
31. 9
19.0
16.6
6.5
5.3
1982
140.9
35.5
23.2
33.8
19.6
16.7
6.4
5.7
1983
147.2
33.3
24.7
36.5
19.7
18.8
7.5
6.7
1984
154.1
34.5
25.5
37.3
21. 3
20.5
7.8
7.2
0'\
\D
By sectors
Year
Total
employed Agriculture
persons
Industry
Construction
Community
and
social
services
Trade,
restaurants,
and hotels
Transport,
storage, and
communication
Other
sectors
!!/
1985
151.2
33.3
24.6
37.5
20.3
20.8
7.3
7.3
1986
166.8
38.5
27.2
40.8
21.1
23.1
8.0
8.1
1987
177.6
36.0
30.1
44.4
22.3
25.2
10.0
9.4
1988
183.0
43.7
29.2
45.1
20.9
24.2
10.3
9.4
----
Sources: UNCTAD, "Selected statistical series on the balance of payments, foreign trade,
population, labour force and employment of the occupied Palestinian territory (West Bank and the
Gaza
", 1968-1987 (UNCTAD/nSn/SEU/1), 1993; and CBS, Statistical abstract of Israel,
(Jerusalem, 1990).
Notes:
Data excludes east Jerusalem.
-J
o
Includes:
electricity and wateri financial, business, and personal services.
Table 5.
Gaza
employed persons
( thousands)
sector, 1968-1988
By sectors
Year
Total
employed
persons
Agriculture
Industry
Construction
Community
and social
services
Trade,
restaurants,
and hotels
Transport,
storage, and
communication
Other
sectors
!!/
1968
44.5
11.3
7.2
4.3
6.4
8.2
3.5
3.3
1969
52.9
17.5
6.6
5.1
7.4
9.6
3.8
2.9
1970
58.7
19.2
6.9
7.3
9.0
9.5
3.5
3.3
1971
59.7
20.2
7.1
5.5
9.5
9.7
4.2
3.6
1972
63.6
19.4
8.4
8.1
10.4
9 0
4.5
3.8
1973
68.1
20.0
8.8
11.5
10.2
9.4
4.9
3.2
1974
73.0
20.2
9.5
14.1
10.0
9.8
5.4
3.9
1975
72.4
17.4
10.3
16.1
9.6
10.2
5.3
3.8
1976
76.1
18.2
11.6
16.5
10.6
10.4
4.9
3.9
1977
77.2
18.2
11.6
16.0
11.3
10.5
5 3
4.3
1978
80.4
17.5
13.9
17.2
10.9
10.9
5.5
4.5
1979
79.6
16.4
15.8
18.3
9.6
10.0
5.0
4.5
1980
80.9
15.1
15.8
18.7
10.5
11 3
5.3
4.2
1981
82.5
14.3
14.3
21. 8
10.6
.7
5.5
4.3
1982
82.0
14.4
13 .0
22.3
11.1
11.3
5.1
4.8
1983
85.3
15.4
14.5
22.3
11.2
11.6
5.0
5.3
1984
87.2
15.6
15.3
22.1
11.2
12.6
5.2
5.1
1985
90.9
17.8
15.9
21.7
11.6
12.9
4.8
5.9
-..l
f-'
By sectors
Year
Total
employed
persons
Agriculture
Industry
Construction
Community
and social
services
Trade,
restaurants,
and hotels
Transport,
storage, and
communication
Other
sectors
!!!/
1996
93.7
1B.O
16.5
23.5
12.0
13 .4
4.B
5.B
1987
100.2
1B.3
1B.1
23.B
12.8
15.0
5.4
6.6
19B8
99.9
19.9
15.2
26.1
11.2
14.3
5.3
6.5
,
Sources: UNCTAD, "Selected statistical series on the balance of payments, foreign trade,
population, labour force and employment of the occupied Palestinian territory (West Bank and the
Gaza Strip)", 1968-1987 (UNCTAD!DSD!SEU!l), 1993; and CBS, Statistical abstract of Israel,
(Jerusalem, 1990).
~!
Includes:
electricity and water; financial, business, and personal services.
-.J
tV
Table 6.
Occupied territory: employed persons by occupation, 1973, 1980 and 1987
(percentages of total employed)
west Bank
occupation
1973
1980
Gaza Strip
1987
1973
1980
1987
Scientific and academic
1 6
2.1
2.4
1.1
0.9
1.8
Other professional
6.4
5.6
5.6
6.2
6.0
5.9
Administrators and managers
0.8
0.8
1.1
0.5
0.8
1.3
Clerical and related workers
2.7
2.7
2.5
3.1
2.3
2.2
Sales workers
9.1
10.1
10.1
12.6
11.3
11.4
Services workers (transport and
communication)
6.2
6.7
8.0
7.5
8.4
8.5
Agriculture
26.5
26.3
20.3
28.8
18.1
18.1
Skilled workers in industry, mining, building
and transport
26.4
25.1
27.2
22.4
31.1
31. 7
Other workers in industry, transport and
building
20.3
20.6
22.5
17.8
21.1
19.1
(percentages)
100.0
100.0
100.0
100.0
100.0
100.0
(thousands)
126.4
134.8
177.6
68.1
80.9
100.2
-..l
Total:
Source:
Note:
CBS, Statistical abstract of Israel,
Data excludes east Jerusalem.
(Jerusalem)
f
W
1976, pp. 714-715; and 1989, pp. 724-725.
Table 7.
Occupied
distribution of gross capital formati.on by type and purpose, 1972 1987
)
Domestic
As a
Private
Formation
Year
and
construction
works
Private
fixed
capital
formation
Machinery
and
equipment
Gross
domestic
Gross
fixed
cal
formation
formation
(1)
-- ! - - -(3- -) - - -f-.
(2)
(?oj
(%)
64. ''-2
1973
Total
private
capital
formation
Government
and
local
authorities
(4)
(5 )
(6)
(7)
milliun LJS$
million US$
(?G)
(%)
(%)
35.88
40.476
60 _, 1176
69.40
30.60
63.810
74.524
1974
73 f!4
26.16
111.435
167.489
1975
76.Sl5
23.05
125.237
1976
82.95
17.05
1977
80 . ~13
1978
-
------
I
88.19
78.74
21. 26
10'/ . 99
77.64
22.36
l3
83.40
16.60
136.278
11f3.S2
73.38
26.62
152.141
177.456
100.92
84.81
15.19
19 07
164.436
175.239
105.56
88.27
11.73
79.11
20.89
179,,038
226.0(iO
90.80
88.40
11.60
1979
81 75
18.25
2')4.756
275.629
103.86
88.56
11. 44
1980
83.B9
16.11
267.0%
349.102
84.94
91.5?
8.43
1981
85, Bil
14,16
272.041
285.618
107.48
87.77
12,23
15.04
289,4:;0
352.759
94.94
87.12
12.88
17.72
~~82.125
330.492
102.57
82.80
17,20
17.25
54.343
309,450
I
102.62
79.58
20.42
261.885
286.588
I
106.81
84 ..57
15.43
1972
1982
1983
8
1984
5
1985
1986
1987
I
17 .28
I
I
8
12,20
17.96
'-.J
t!>
Table 7.
Source: UNCTAD, "Selected national accounts series of the occupied Palestinian territory (West Bank and
Gaza Strip) ", 1968-1987, (UNCTADjRDPjSEUj6).
Note:
Data excludes east Jerusalem.
~~~~=-"~~~:
Private fixed capital formation
Capital formation in building and construction works plus
machinery and equipment.
Total private
Private fixed capital formation plus changes in olive oil
stocks.
formation
Gross domestic capital formation
Total private capital formation
fixed capital
formation by government and local authorities.
Gross fixed capital formation
Total private fixed capital formation plus fixed
formation by government and local authorities.
-.J
U1
Table 8.
occupied territory:
balance of payments on the current and capital accounts,
1968 1987
(Millions of current United St
1971
1970
1972
19711
1968
1973
1969
1975
1976
1977
CLJ RRt. NT ACCOU NT ------~-__::_-_:_:-___,_---_=_::_:___=_=-_:_:::_::____::__c:_:_-_:_:______:_:_::_-__._:_::___:_:__=__-::_::_____:__=_-___::_:_:__::_::__:_-_:_:,___________,_-_:_--~
TRADE BALANCE
Exports of Goods (FOO)
Imports of Goods (FOB)
BALANCE ON SERVICES
Total Services CredIt
Total Sp.rvices Debit
29. 1137
66.997
37.560
111.190
49.405
152.905
65.024
210.022
91.861
1 1.
209.1J32
98.060
.
237.254
126.159
111.788
248.776
136.988
o
000
3.629
0.000
5.09 11
0.952
6.929
3.952
8.690
3.812
12.265
8.738
13 . 186
3.1J 13
13.21J9
5.163
13.601J
9.61l6
3.657
7.657
6.542
6.515
8.071
10.238
7.619
15.310
111.260
21.861
11.183
22.192
12.078
29.987
32.961~
0.286
0.657
1. 143
1.629
1.877
2.279
1.57
2.929
2.01J8
3.833
2.69
5.000
3.628
7.256
3.501
7.015
3.509
7.008
Direct Investment Income Credit
Direct Investment Income Debit
0.886
0.01l6
0.886
0.086
0.912
0.131J
0.833
0.119
1.000
0.167
1 . 121
0.179
0.9 116
0.158
0.907
0.151
0.822
0.13 11
Govornment Sorvlces Credit
Government Services Debit
0.000
2.1100
0.000
2.800
0.000
2.869
0.000
2.1105
0.000
2.976
0.000
3.924
0.000
3.896
0.000
4.156
0.000
1J.321
Credit
Debit
15.571
4.829
32.3111
12.771
57.668
20.670
99.762
26.786
138.286
311.0 118
188.139
118.632
181J.937
51.372
217.355
71.599
226.023
78.958
Gredlt
Debit
15.571
2.829
32.31 11
3.51J3
57.668
1J.316
99.762
3.952
138.286
3.952
188.139
11.978
184.937
5.1J57
217.355
5.101
226.023
1J,809
-/J7.371
-1J1J.029
81J.200
128.229
-25.841J
133.646
159.491
-18.1105
198.810
217.214
-22.262
256.238
278.500
-63.386
366.390
429,775
-102.823
1103.107
505.930
-91.688
InO.755
562.1J43
-136.855
.921
.776
36.51J7
55.583
19.036
38.8119
77.729
38.880
92.985
127.909
34.92 11
87.199
122.380
35.182
2.000
22.571
20.571
Transport Credit (a)
Transport Debit (a)
Travel Abroad Credit
Travel Abroad Debit
0.000
3.086
17.
10.
nsurBnce Credit
nsurance Debit
Other Services
Other Sorvlcos
of ~hlch
Labour Income
Labour Income
BALANCE ON GOODS AND SERVIGES
Goods and Services Credit
Goods and Services Debit
0.3 1,3
21.086
20.743
.3 IL"
9. 1129
31l.000
211.571
-32.286
56.286
88.571
60.429
107.800
NET UNREQUITED TRANSFERS
Transfers Credit
Transfers Debit
60.21J6
.286
0.000
5B.657
1.857
65.000
70.311,
5.3111
60.6 113
68.767
8.123
51J.333
69.238
111.905
2 11.000
37.952
13.952
BALANCE ON THE CURRENT ACCOUNT
Halance
Current Account Credit
Current Account Debit
28.000
16.571
BB.)71
9.1429
119.086
109.657
20.971
154.5111
133.5 113
311.799
202.1113
167.6111
35.929
268.048
232.119
1.738
294.190
292.452
-26.839
1121.972
IJIHl.811
-63.975
480.835
5 1111.810
1.
598.665
597.367
-28.000
0.000
28.000
-9.429
0.000
9. 1129
-20.971
0.000
20.971
-34.799
0.000
34.799
-35.929
0.000
35.929
13.929
13.929
0.000
26.839
26.839
0.000
63.975
63.975
0.000
-1.297
11.987
16.285
CAPITAL ACCOUNT (b)
Balance
Capital Movements Credit
Capital Movements Debit
)6.800
13.260
--
119.656
Ij9.656
0.000
Table 8.
Occupied
balance of payments on the current and capit:al accounts,
(continued)
1968 J.987
current
CiJl\iU N r
19H2
1983
198 /1
198')
1986
1987
-j35.800
398.500
13 /1.300
-398. 1100
393.500
791.800
.000
409.238
754.177
-389.900
-504.100
-6~1.200
296.300
281.100
.LIOO
690.300
671.000
395.000
891.500
052.200
218.511
447.310
228.799
257.100
491.000
<'33.300
338.100
59 /1.300
?55.600
77.700
1100.600
222.900
293.900
567.300
273 .400
L,119.200
1180.500
245.900
19H
1918
S'79
19BO
-325.8-ra
-344.9~9
1")9.255
-300.746
.D83
577.830
353.47
679.351
182.508
.765
176.258
1813.973
1103.356
214.383
ACCOUNT
H,AO[ flAI_ANCE
Fxports of Goods
(rOB)
mports of Coods (FOB)
BALANCE ON SERVICES
Total Services Credit
fotal Services Debit
.6
? 'j 7 . 1 I III
136.412
---- ------ ----
-------------------------------~--------
167.700
318.500
------ -------------------------------
5.624
12.881
7.21'2
17.335
9.290
2 11.317
0.760
22.290
12.200
23.900
21+.~~OO
11. 100
21.600
10.900
26.400
15.100
37.200
18.500
116.400
12.062
3.173
13.876
110.920
17 018
119.122
16.578
58.525
13.200
47.500
14.800
45.300
10.900
47.400
11.200
43.000
12.600
47.900
15.200
56.300
3.
7.068
.796
9.827
5.406
10.988
5
12.151
6.300
13.100
7.600
16.100
24.200
29.900
10.500
12.900
.700
16.800
2 11.500
Direct Investment Income Credit
Direct Investment Income Debit
0.590
0.097
.472
.079
0.293
0.039
0.157
1.076
0.091
1.100
0.0 116
1 .400
0.000
0.700
0.000
0.600
0.000
0.200
0.000
0.100
Government Services Credit
Government Services Debit
0.000
3.929
0.000
4.560
0.000
5.2:;'0
0.000
5.030
0.000
5.200
0.000
5.400
0.000
11.900
0.000
.900
0.000
5.800
6.500
Credit
Debit
235.367
79.32 11
332.3')0
103.538
371.350
124.668
1'13.909
29.726
1159.300
142.500
559.900
163.200
1;34.300
141.1100
368.000
35.100
525.900
165.500
'f14.200
184.700
Cred t
Deb it
235.367
4.187
332.350
9.709
371.350
1.397
1,1 J .909
11.276
459.300
11.700
559.900
3.000
434.300
l1L200
368.000
9.500
525.900
9.400
f14.200
BALANCE ON GOODS AND SERVICES
Goods and Services Credit
Goods and Services Debit
-71. 7[J1
.94fi
595.727
-118.239
75 1;.087
-136.905
756.830
a93.735
-126,1.;28
856.5 117
982.975
-78.100
889.500
967.600
-59.700
987.100
10117.I\()0
-159.400
176.800
936.200
-212.200
681.700
893.900
-210.200
954.100
1164.900
-208.000
162.700
1370.700
NET UNREQUITED TRANSFERS
Transfers Credit
TrRnsfers Debit
1
91.05 11
.564
35.510
9 it.85
144.101,
49.253
111.007
167.11211
:)6.42
119.281
182.7111
63. 113
106.600
71.700
65.100
100.300
79.100
78.800
92.200
149.800
57.600
70.800
108.300
37.500
74.126
8.750
1.4.6211
129.906
189.530
59.62 1,
9.273
650.509
631.237
-23.388
779.952
803.340
-25.898
924.257
950.156
-7.147
1039.260
046.407
28.500
1061.
1032.700
1,0.600
1166.800
1126.200
-6f.200
926.600
993.800
-1111.400
790.000
931.400
3.300
1076.200
1209.500
-80.100
350.200
11,30.300
23.388
25.898
55. 1,6 1,
29.567
6.360
54.527
48.167
-28.500
?7.400
55.900
25.400
66.000
133.300
80.100
100.000
19.900
TrRnsport Credit (a)
rransport Debit (a)
Travel Abroad Credi t
Travel Abroad Debit
nsurBnce Credit
nsurance Debit
Other Services
Other Services
of 'Which
Labour Income
Labour I ncome
BALANCE ON THE CURR[NT ACCOUNT
Balance
Current Account Credit
Current Account Debit
CAPITAL ACCOUNT (b)
Balance
Capital Movements Credit
Capital Movements Debit
-19.273
0.000
19.?7
.8 1·l9
52
29.049
12.000
141.
141.1100
0.000
-1
0.000
19.800
n.ooo
0.800
Source:
UNCTAD, "Selected statistical series on the balance of payments, foreign trade, popUlation, labour force
and employment of the occupied Palestinian territory
(West Bank and Gaza Strip), 1968-l987",
(UNCTAD!DSD!SEU!l) .
Notes:
Data exclude east Jerusalem.
(a)
(b)
Inclusive of Passenger Transport,
Private currency holdings only.
Shipment and others.
-..l
-..l
Table 9.
accounts, 1968-1987
balance of payments on the current and
Gaza
(Millions of current united States dollars)
CURRENT ACCOllNT
mllDE BALANCE
Exports of Goods (FOB)
mpOrts of Goods (FOB)
BALANCE ON SERVICES
Total Services Credit
Total Services Debit
1966 a
1969 a
1970
1971
1972
1973
1975
1976
1977
1
72.729
31.388
84.836
38.149
87.3 112
40.688
2.018
5. 1104
3.502
5.694
1.57 ,
6.297
2.562
6.597
2.262
2.7111
3.632
3.767
3.328
3.1.170
3.51 11
4.257
3.738
4.1174
0.333
0.762
0.500
1.119
0.762
1.570
1.104
2.350
1.209
2.594
1.205
2.591
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
1.099
0.000
, 167
0.000
1.1129
0.000
1.883
0.000
1.877
0.000
2.003
0.000
2.084
52.286
11.214
69.103
,5.87 11
64.795
17.997
78.539
22.997
79.837
24.9113
69.103
1.771
61,.795
2.224
78.539
1.8111
79.837
1.7110
1
, 53.281
207.902
-36.272
189.282
225.554
220.899
277 .906
52.557
65.264
12.708
52.
64.885
12.878
33.714
68.000
7 1II
39.3 113
87.057
-19.971
14.686
311.657
2.000
22.571
20.571
O.
1.086
20.7 113
9.143
7.800
13.378
9.973
18.881
33.286
14.405
57.095
20.262
0.000
3.086
0.000
1.1100
0.000
2.011
0.952
2.905
2.0 18
3.786
11.3113
0.943
1.229
1. 394
9.686
1.421
1.952
2.048
0.2M
0.657
0.343
0.171
0. 1129
0.509
Direct Investment Income Credit
Direct Investment Income Debit
0.886
0.086
0.000
0.000
Government Services Credit
Government Services Debit
0.000
2.400
0.000
1.086
Transport Credl t (b)
Transport Debit (b)
Travel Abroad Credit
Travel Abroad Debit
~117.
67.190
1.
-------------------------------------------------------------------------------------------------1
1
17 .429
10.286
nsurance Credit
nSlIrance Oeblt
Other Services
Other Services
of which
l.abour Income
l.abour income
Credit
Debit
15.571
4.829
7.857
3.9,11
11.555
11.933
30.048
7.524
Crodlt
Debit
15.571
2.829
7.857
, . 171
,1.555
1.448
30.048
1.143
52.286
1.1105
18.
23.829
112.457
- 1 .791
39.893
55.68 11
• 3.
68.071
81.595
-3.
100.238
103.714
BALANCE ON GOODS AND SERVICES
Goods and Services Credit
Goods and Services Debit
NET UNREQUITED TRANSFERS
Transfers Credit
Transfers Debit
OALIINCE ON HiE CURRENT ACCOUNT
Dalarlce
current Account Credit
Current Account Debit
-32.
56.286
813.571
-117.37 ,
60.429
107.800
60.2136
60.2136
0.000
56.800
58.657
1.857
28.371
29.629
,.257
29.383
31.019
1.635
26.262
31.0118
4.786
11. 3 10
15.643
11.333
28.000
116.571
8Ll.571
9.429
119.0136
109.657
9.743
53.457
113.7111
13.592
70.912
57.319
12.738
99.119
86.38,
7.833
115.881
108.0 118
-28.000
0.000
28.000
-9. 1129
0.000
9.429
-9.743
0.000
9.743
-13.592
0.000
13.592
-,2.738
0.000
12.738
7.833
0.000
~
CAPITAL ACCOUNT(c)
[Jal/lnGI'!
Capital Movements Credit
Capital Movements Debit
19711
--------------
7.833
~57.008
-15.404
156.995
172.399
-25.237
195. 1157
220.69 11
16.285
25 11.5 117
238.262
-5.000
285.78 11
290.78 11
15. 110 11
15. 1104
0.000
75.237
25.237
0.000
-16.?85
0.000
16.285
7.000
5.000
0.000
-.]
co
'r",hle .)
t; :
LB
8"7
CUFZ,U: N r ACCOUN
THADE BALANC[
ts Of Goods (fOB)
ImportS
Goods (rOB)
·2
ANeE ON SlRVICES
123.JOO
21o.
Total Services Credit
lOot
I
~)cr'viC8!~
9: <"• •
Oehit:
rr"an:,port Cr'(HUt.
(a)
.Ill'
ransl'",'1; Doblt (Il)
() . 2 II J
:;
BVt-J I !dH'oiHl Cred
RV'! I MH'oud Del!
In'iUr"fH1Cn
Cr'od! t
t
~)Hr~viCO$
,)
.
7.1~'"
')
CO~
.000
C).OOD
1 . G:'(~
Cradl t
1
133 •
OtlHlr Sorv I cor; Deh It
3 il
1
,11
1.600
111?IIOO
378.200
511.600
167.200
52.GOO
11,5.000
251.000
106.000
. g!J
.IH)O
.1100
11.700
11.900
:)~::U
Ii .00ll
11. ?OO
10~(;nO
1 .700
6.900
17 . 900
21 600
it .689
11.200
B.1IOO
11.700
'1.300
1.900
1l.I.oO
li.200
7.600
11.800
8.700
;, . 500
10.200
10.
•. 9 iU
1\ .113 1
9.n8
2.
~)
.
~
11
.1150
8.700
2.600
3.200
r
J.
6.900
10.600
13.100
4.200
5.100
5.700
7.100
8.lJOO
10.300
0.000
000
0.000
0.000
0.000
0.000
0,000
0.000
0.000
0.000
0.000
.000
0.000
0.000
0.000
a.ooo
0, llOO
2.l.t3?
0.000
?500
O.(lO(l
~'. (iOn
(l.OOO
.400
0.000
2.1.00
0.000
? eoo
0.000
3.100
190.000
50.6(10
251.600
196.800
511. tlaO
153.')00
5 11. BOO
233.600
69.500
309.700
71 .200
190.000
3 600
2')1.600
196.800
1\ .1100
153.900
3.000
233.600
3.200
309.100
3.700
-87.900
-90. 1100
393./300
o 000
G.
t
11
II.
.Oou
Gr€Hi
Governmollt ServIcos Dobi
Lllt1r
.
,-.
ncomo Credit
ncomu Dnblt
1-1,
i 1 .1119
:> •
nsw-anco Debl
Govornment S(H'vl
(':'onti nued)
;~. ~)J
7
152.303
i 4? . 16
179 .
1,7 2
6', .
of will
I ncome Or fHj I t
Labour income Deb It
bEl
La ()(Jur
13
15
17().II07
3. ',Oil
li.l00
----~~----,-~-.
BALANCE ON GOUDS AND SERVIClS
Goods Rnd
rvlces Cradi L
Goods nnd Sorvico5 ORbIt
:).100
).3(i:i
2
q8~.200
--,~~--
.300
NO lINRCqUl1TD TRANSFERS
TriJn~~;f{H"S Gj~fH11 t
r'iJnSfIH'S Debl t
n
53.900
.900
31\.500
[)AU\NCL ON jill CUHHENT ACOUNT
Balance
----~~-
1 1•
167
-4e.600
330.;:00
3713.1l00
16.8 11[\
CAP I T tIL t,CGOUNl (b)
Ba!
Capital Movcments Credit
Capital Movements Debit
Source
lie.
1!65. 01~)
Current
Credit
Current Account Debit
(I.U()O
.167
-55.900
.000
55.900
Notes:
(b)
Ie
..
..
25.200
-~--~--
-47.900
115 1•• 600
502.500
19.900
573.900
55 1, .000
-------.,.---~-
.liS.l
"Selected statiDtic<il Bcries on the balance of payment8, fore
of the oC~llpied Palestinian
(WE~8t
(a)
111.600
112.500
60.800
18.300
Data cover both the West B,Ulk and the Gdza
Inclusive of PR8SenQer Tr·RnO'.lOrt, Shipment and otherH
47.900
117.900
C).OOO
trade, popUlation,
and Gaza Strip).
-19.900
0.000
19.900
labour force
1968-1987".
-J
\.0
Table 10.
West Bank: balance of payments on the current and capital accounts,
1968-1987
(Millions of current United States dollars)
1968 a
1969 a
1970
1971
1972
1973
1974
1975
1976
1977
-33.486
31.514
65.000
-36.086
40.134
76.220
-47.786
52.833
100.619
-69.833
60.190
130.024
-104.910
94.977
199.888
-118.233
113.123
231.356
-119.824
129.055
248.879
-144.981
124.589
269.570
0.343
21.086
20.743
8.086
28.857
20.771
26.032
53.619
27.587
42.905
77.905
35.000
51.048
95.809
44.762
71.143
134.507
63.363
70.032
136.703
66.672
64.408
152.418
88.010
65.134
161.434
96.300
0.000
3.086
0.000
2.229
0.000
3.083
0.000
4.024
1.905
4.905
1.79 11
6.861
5.237
7.492
1.839
6.952
2.600
7.008
4.343
9.686
2.714
6.429
5.1117
5.094
6.119
8.190
5.357
12.595
10.628
18.094
7.855
18.722
8.564
25.730
9.522
28. 1189
0.286
0.657 "
0.800
1.457
1.448
1. 769
1.238
2.167
1.5 118
2.714
1.928
3.430
2.524
4.905
2.292
4.421
2.30 11
4.417
Direct Investment Income Credit
Direct Investment Income Debit
0.086
0.086
0.886
0.086
0.912
0.134
0.833
0.119
1.000
0.167
1 . 121
0.179
0.946
0.158
0.907
0.151
0.822
0.1311
Government ServIces Credit
Government Services Debit
0.000
2.400
0.000
1.714
0.000
1.769
0.000
1.238
0.000
1.548
0.000
2.040
0.000
2.019
0.000
2.15 11
0.000
2.237
Credit
Deb1t
15.571
4.829
24.457
8.857
116.113
15.737
69.714
19.262
86.000
22.833
119.036
32.758
120.1112
33.375
138.816
48.602
146.185
54.015
Credit
Debit
15.571
2.829
24.457
2.371
46. 113
2.869
69.71 11
2.810
86.000
2.548
119.036
3.206
120.1112
3.233
138.816
3.287
146.185
3.069
-32.286
56.286
88.571
-47.371
60.429
107.BOO
-25.400
60.371
85.771
-10.054
93.753
103.807
-4.881
130.738
135.619
-18.786
156.000
171\. 786
-33.767
229.484
263.251
-48.202
249.827
298.028
-55. 1116
281 ,1173
336.889
-79.8 117
286.023
365.870
60.286
60.286
0.000
56 .800
58.657
1.857
36.629
40.686
4.057
31.260
37.748
6 .. 1188
28.071
38.190
10.119
12.690
22.310
9.619
22.332
35.493
13.161
9.46 11
35.552
26.088
40. 1128
62.6 115
22.217
35.191
57. 1195
22.304
28.000
116.571
88.571
9. 1129
119.086
109.657
11.229
101.057
89.829
21.206
131.501
110.295
23.190
168.929
145.738
-6.095
178.310
184.1105
-11.435
264.977
276.1112
-38.738
285.378
324.116
-14.987
344.118
359.105
-44.656
343.518
388.1711
-28.000
0.000
28.000
-9.429
0.000
9. 1129
- 11 .229
0.000
11.229
-21.206
0.000
21.206
-23.190
0.000
23.190
6.095
6.095
0.000
11.435
11 .435
0.000
38.738
38.738
0.000
14.987
14.987
0.000
44.656
il(1. 656
0.000
CURRENT ACCOUNT
TRADE BALANCE
Exports of Goods (fOB)
Imports of Goods (FOB)
BALANCE ON SERVICEs
Total Services Credit
Total Services Debit
-34.286
33.714
68.000
2.000
22.571
20.571
Transport Credit (bl
Transport Debit (b)
Travel Abroad Credit
Travel Abroad Debit
17 .429
10.286
nsurance Credit
nsuranCD Debit
Other SerVices
Other Services
or which
Labour Income
Labour Income
BALANCE ON GOODS AND SERVICES
Goods and Services Credit
Goods and Services Debit
NET UNREQUITED TRANSFERS
Transfers Credit
Transfers Debit
fJALANCE ON THE CURRENT ACCOUNT
Balance
Current Account Credit
Current Account Debit
-47.714"
39.343
87.057
CAPITAL ACCOUNT (e)
Balance
Capital Movements Credit
Capital Movements Debit
().')
o
Table 10.
West Bank: balance of payments on the current and capital accounts,
1968 .. 1987 -
(continued)
(Millions of current United
7n
CiiHf{UIl ACCOUNT
fIIAO[ I1ALANcr
X0ort~ of Goods (FOB)
mports or Goods (rOB)
"AI~ANCE
Tot;!!
OHoi t:
19nO
19U2
19U1
191\1.
1983
~--~~~--
-109.113 1
-;~(;2
Gn~
.571.
1 ttl~ . 15?
2~
217.391
440.923
.33
206.900
1.23.700
-...
;>55.il31
161.730
9 3 ~ 1!:\ 1
-220.500
190.100
Ii 10.600
-217.400
172.000
389. l 100
329.1100
100.900
111.300
2611.500
1:'3.200
93.100
233. 1100
140.
153~361i
6.400
11 600
6.000
13.700
1l.200
19 300
9.800
21j .BOO
--------------------------------- -----------
---~---~
3.300
435. 1100
------------ ----
202
------
~OO
--
.BOO
11. 740
12.900
6.600
13.000
166
12.100
40.691
11.859
llil .797
9.000
39.100
10.100
37.000
7.000
39.000
6.300
.800
7.500
39.200
9.700
116.100
9.1:)9
Abroad Credit
lravel Abroad Debit
.757
.3b3
9.98 1"
,j.
33
23'1.700
639.800
5 lI87
6.638
Travel
?1"".600
513.300
5.172
12.561l
TriHlsport CrfHi! t (~j)
TriinsporL Oct/it (a)
.Htf 1
198':>
~~---
-248.300
211. H)O
1'59. 1!00
6B. ,:99
ON SERVICES
Sc:rviCHf. Credit
fo t" I $f?rvi<:es
1979
4.2Q4
5.5H2
3.201
6.2115
3.39 11
6. -ro 1
3.700
7.500
4.400
9.200
13.600
16.flOO
6.300
7.800
7.800
9.700
11. L,OO
InSUr'8nce Debit
rect Investment Income Credit
Direct Investment Income Dobl t
0.590
0.097
0.472
0.079
0.293
0.039
0.157
1.076
0,091
1.100
0.046
1.400
0.000
0.700
0.000
0.600
0.000
0.200
0.000
0.100
Government Services Credit
Governmen SerVic8s Oebi t
O.O,JO
.000
0.000
2.713
0.000
2.598
o.noo
?700
0.000
2.500
0.000
?500
.000
2.S00
.OO()
3.000
0.000
3. 1100
219.047
81. 752
?34.503
82./151
269.300
91.900
308.300
91.500
231.S00
82.600
214.100
flO.300
292 . 300
96,000
404.500
113, SOO
269.300
8.100
308.300
8.900
237 . 500
9.BOO
2111.100
292.300
6.200
40 11.500
7.100
-1 1.
/17.3.221
594.287
-83.Z00
495,700
571).900
-79.800
S40.S00
620.300
(1)1\.600
563.500
1,05. 1100
529.700
560.900
680.700
5).800
93.000
37.
98.700
4 1\,300
500
67.700
33.200
3 i .500
31. 9 lit)
1
65.
101.023
35.272
5 11 . ilClO
22.900
31\ .1,00
60.700
26.300
11.800
106.200
34.1100
-5;' 465
530.3a6
585.851
- 55.3111
5711. 21!11
629.559
-27 .1100
5S8.IOO
616.100
-25,1100
639.200
664.600
-71'.700
5:>2.300
597.000
-92.!lOO
1159. aoo
-<35 I.OC
552.600
621.600
707.000
-100.000
776.300
876.300
5 11.527
0.000
27 ,400
o 000
25.400
0.000
74.100
74.700
0.000
92.800
92 .800
0.000
135. 1,00
85.400
0.000
100 000
100,000
0,000
nsurflnce Credit
2.185
Ottlcr Services Credit
Lher ScrviC(~$ Debit
of which
l :1t!our Income Cro{1it
L8l)our
.0.13
147 3:)4
S3.035
2.
109.135
69. lOll
199.
Income Debit
19.047
7.358
~!~nc8 on Goods and Services
Goods and Services Credit
Goods and Services Dehit
6,~OO
-1
111.200
-171.800
670.100
1l1\1.900
~-~--~
NlT UNREQUITED TRANSFERS
1 rflnsfBrs Credi t
o:Irlsfers Dobit
(jALANCE ON TIlE CUflRENi ACCOUNT
[1nlrtnc(!
-:)? .Lj}7
Cur'rent ~'\ccount Cre{1i t
452.633
50:'.070
Current Account DebIt
CAPITAL ACCOUNT (hi
.127
\38/ ;)nce
Movp,ments Credl t
P I en I Movements Debit
C(lpital
o . or)\)
',27
)2 ;;,37
0.000
UNCTAD, "Selected statistical series on the balance of payments, foreign trade, population,
and employment of the occupied Palestinian territory
(West Bank and Gaza strip),
(UNCTAD/DSD/SEU/l) .
Source:
Data exclude east Jerusalem.
Notes:
(a)
(b)
(c)
Data cover both the West Bank and the Gaza Strip.
Inclusive of Passenger Transport, Shipment and others.
Private currency holdings only.
labour force
1968 1987",
82
Number of vehicles by type in the West Bank,
selected years, 1970 1987
Table 11.
1970
Type of vehicle
1980
1984
1985
1987
1986
Private cars
1 626
11 691
27 787
31 238
35 349
39 091
Trucks and commercial
vehicles
1 199
7 905
11 225
11 786
12 582
13 710
Buses and minibuses
394
508
567
571
591
614
Taxis
828
892
939
939
941
942
Tractors
459
2 145
3 311
3 560
3 763
3 972
153
487
524
531
531
531
vehicles and
others
Source:
Note:
various issues
CBS,
(Jerusalem).
Data excludes east Jerusalem.
Table 12.
Type of vehicle
Number of vehicles by type in the Gaza Strip,
selected years, 1970-1987
1970
1980
1984
Private cars
1 293
7 550
15 893
Trucks and commercial
vehicles
1 053
3 905
28
1985
1986
1987
18 761
15 893
18 761
3 849
4 377
3 849
4 374
73
62
67
62
67
-
790
773
773
773
773
Tractors
36
626
627
680
726
734
Special vehicles and
others
13
66
26
48
56
73
Buses and minibuses
Taxis
Source:
CBS, Statistical abstract of Israel, various issues
(Jerusalem).
- 83 -
Table 13.
Year
Balance
on
services
Occupied Palestinian territory:
travel and services
payments and
, 1968-1987
(in million current dollars)
Total
services
payments
Total
services
receipts
Balance
on
travel
Travel
abroad
payments
Travel
abroad
receipts
Travel
receipts as
per cent of
service
receipts
1968
2.00
20.57
22.57
7.14
10.29
17.43
77.2
1969
0.34
20.74
21. 09
-5.34
9.69
4.34
20.6
1970
9.43
28.57
38.00
-4.00
7.66
3.66
9.6
1971
29.44
37.56
67.00
0.03
6.51
6.54
9.8
1972
61.79
49.40
111.19
-2.17
10.24
8.07
7.3
1973
87.88
65.02
152.90
-7.69
15.31
7.62
5.0
1974
118.16
91. 86
210.02
-7.60
21.86
14.26
6.8
1975
111.37
98.06
209.43
11.01
22.19
11.18
5.3
1 1976
111.10
126.16
237.25
-17.91
29.99
12.08
5.1
1977
111. 79
136.99
248.78
-19.70
32.96
13.26
5.3
1978
120.68
136.47
257.15
-21.11
33.17
12.06
4.7
I 1979
182.51
176.26
358.77
27.04
40.92
13.88
3.9
1980
188.97
214.38
403.36
-32.10
49.12
17.02
4.2
1981
218.51
228.80
447.31
-41.95
58.53
16.58
3.7
1982
257.70
233.30
491.00
34.30
47.50
13.20
2.7
1983
338.70
255.60
594.30
30.50
45.30
14.80
2.5
1984
234.60
245.90
480.50
-36.50
47.40
10.90
2.3
1985
177.70
222.90
400.60
-31.80
43.00
11.20
2.8
1986
293.90
273.40
567.30
-35.30
47.90
12.60
2.2
1987
449.20
318.50
767.70
41.10
56.30
15.20
2.0
!
I
Source:
UNCTAD "Selected statistical series on the balance of payments,
foreign trade, population, labour force and employment of the occupied
Palestinian territory (West Bank and the Gaza Strip) ", 1968-1987
(UNCTJI.D/DSD/SEU/1).
All figures for 1968-1984 are on balance-of-payments data
originally published in the respective annual editions of:
Israel Central
Bureau of Statistics,
Figures for 1984 and
for 1985 1987 are based on balance-of-payments data originally published in:
Israel, Central Bureau of Statistics, Judea, Samaria and Gaza Area statistics,
vol. XVII, No.3, and vol. XVIII, No.2, respectively.
Note:
Data excludes east Jerusalem.
84 -
Table 14.
Number of applications and number of approved
building licences in the West Bank, 1985-1990
Year
Number of
applications
Number
approved
Number not
approved
1985
2 593
1 900
693
73.3
1986
2 767
2 043
724
73.8
1987
640
238
402
37.2
1988
442
260
182
58.8
1989
506
297
209
58.7
1990
1 766
839
927
47.5
Total
8 714
.5 577
3 137
64.0
Per cent of
applications
approved
Source:
Bethlehem Municipality - Engineering
Department, 1990, Special
Table 15.
Number of engineers in the West Bank, by branch and locality, 1990
Locality
Branch of
Engineering
Ramallah,
Bireh
East
Jerusalem
425
118
117
72
113
845
84
34
26
21
19
184
Electrical
150
48
48
44
60
350
Mechanical
124
38
41
30
46
279
33
10
12
5
11
71
5
-
-
3
2
10
11
5
4
2
3
25
832
253
248
177
254
1 764
Civil
Architecture
Chemical
Applied
Other
Total
Source:
Nablus,
Jenin,
Tulkarem,
Qalqilya
Bethlehem,
Beit-Sahur,
Beit-Jala
Hebron
Union of West Bank Engineers r Beit-Hanina, 1991.
Total
- 85 -
Professions and number of professionals
in the West Bank and the Gaza Strip, 1990
Table 16.
Profession
West Bank
Engineers
Gaza Strip
Total
1 739
680
2 419
Engineers
316
400
716
Chemists
310
110
420
1 234
700
1 934
Agricultural
Doctors
Dentists
276
276~
..
Pharmacists
310
110
420
Lawyers
261
253
514
4 446
2 253
6 699
Total
Sources: Union of West Bank Engineers, Beit Hanina,
1991; Union of Palestinian Engineers, Gaza Strip, 1991;
West Bank Medical Association, 1991; West Bank Pharmacists
Association.
g/
Table 17.
Excluding Gaza Strip dentists.
Number of establishments in major service branches
in east Jerusalem, 1969, 1982 and 1986
1969
1982
1986
1
13
23
946
1 287
1 505
947
1 300
1 528
Financial and insurance
5
14
32
Real estate and engineering
1
14
28
44
126
41
50
154
101
Hotels, restaurants, entertainment
259
284
126
Repair and other personal service
120
99
74
379
383
200
1 376
1 837
1 829
Distributive
Transport
Wholesale/retail trade
Sub total
Producer
Accounting, legal and other business services
Sub-total
Personal
Sub-total
Total
Sources:
Data for 1969 and 1982 are from Hyman, et al., Jerusalem in
(Jerusalem Institute for Israel Studies, 1985); Data for 1986
are from Alawneh, A. and Abu-Harb, Q., Economic conditions in Arab Jerusalem
(Arab Studies Society, Jerusalem, 1988).
- 86 -
Table 18.
Palestinian accredited universities: Year of start of
undergraduate degree, number of majors offered, enrolment
(1980/81 and 1987/88) and faculty (1987)
Start of
BA/BS
programme
No. of
majors
offered
1980/81
1987/88
Teaching
staff,
1987
Bir-Zeit
1972
23
1 661
2 652
210
Bethlehem
1973
14
935
1 517
99
An-Najah
1977
22
1 672
3 514
206
Islamic (Gaza)
1978
14
1 312
4 483
193
Hebron College
1980
7
949
1 603
53
Abu-Dis
1981
10
-
643
85
Paramedical
1979
3
105
240
28
AI-Umeh
1982
3
-
309
21
AI-D'awah
1978
2
170
359
8
University
No. of students
AI-Quds:
Source:
Council of Higher Education, Ramallah, Jerusalem, 1991.
Development of hotels in the West Bank,
selected years, 1970-1987
Table 19.
1970
1975
1980
1987
29
25
15
18
No. of rooms
342
303
196
358
No. of beds
868
779
486
807
No. of guests
58 047
36 343
14 186
14 537
Person-nights
84 590
79 579
35 855
39 272
% occupancy
27
20
11
13
Employees
(monthly average)
49
48
26
49
No. of hotels
Source:
CBS, Statistical abstract of Israel
(Jerusalem, 1989).
Note:
Data excludes east Jerusalem.
- 87 -
Hotels and rooms in Israel
and the West Bank (1990)
Table 20.
Israel 1989
Hotels
(1989),
West Bank 1990
Rooms
Hotels
Rooms
5
1 969
-
-
5 star
26
6 747
2
344
4 star
69
9 926
9
748
3 star
105
8 529
14
824
2 star
55
2 170
10
328
1 star
24
839
5
127
Holiday village
13
1 688
-
-
8
749
-
-
305
32 617
40
2 371
5 star deluxe
Others
Total
Sources:
Israel Central Bureau of Statistics,
Monthly bulletin of statistics, vol. 11, Nov. 1990;
the Arab Hotel Association.
Number of licensed restaurants in the
occupied Palestinian territory, 1987
Table 21.
Location
Number
Gaza city
9
Rafah
4
Bethlehem
13
Ramallah-Bireh
10
East Jerusalem
19
Nablus
14
Jericho
5
Hebron
3
Tulkarem
3
Total
Source:
p. 21.
80
Israeli Ministry of Tourism, 1988,